Q2 2024 Braze Inc Earnings Call

Speaker 1: We will make statements related to our business that are forward-looking under federal securities laws and the safe Harper provisions of the private securities litigation reform act of 1995. These statements include but are not...

Operator: We will make statements related to our business that are forward looking under federal securities laws and the safe harbor provisions of the Private Security's litigation reform act of 1995. These statements include, but are not limited to, statements regarding our financial outlook for the third quarter ended October 31, 2023, and for our fiscal year ended January 31, 2024, our planned product and feature development and the benefits to us and our customers therefrom, including our AI features, the potential impact and duration of current macroeconomic trends, our anticipated customer behaviors, including vendor consolidation trends and their impact on Braze, and our long term financial targets and goals, including the anticipated period in which we may generate positive non-gap 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.

Our 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 third quarter ended October 31, 2023 and for our fiscal year ended January 31, 2020 for our plan.

Speaker 1: statements regarding our financial outlook for the third quarter and in October 31, 2023, and for our fiscal year and January 31, 2024, our plan, product, and feature development and the benefits to us and our customers there from, including our AI feed.

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 brain and our long term financial targets and goals, including the anticipated period in which we may generate.

Speaker 1: the potential impact and duration of current macroeconomic trends, our anticipated customer behaviors, including vendor consolidation trends and their impact on braze, and our long-term financial targets and...

Speaker 1: including the anticipated period in which we may generate positive non-GAAP operating income and positive free cash flow.

Positive non-GAAP operating income and positive free cash flow. These.

Speaker 1: 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 forwardless in 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.

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 todays.

Operator: 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 risk 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-gap financial measures used by management to evaluate our ongoing operations and aid investors in further understanding the company's fiscal second quarter of 2024 performance.

Press release, and our SEC filings both available on the Investor Relations section of our website.

Speaker 1: 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 aid investors in further understanding the company's fiscal second quarter, 2020 for performance, in addition to the impact these items have on the financial results.

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 second quarter 2024 performance. In addition to the impact these items have on the financial results.

Operator: In addition to the impact these items have on the financial results, please refer to the reconciliation of our non-gap financial measures to the most directly comparable financial measures calculated in accordance with US gap, included in our earnings release under the Investor Relations section of our website.

Speaker 1: Please refer to the reconciliations of our non-GAAP financial measures to the most directly comparable financial measures calculated in the accordance with US gap, including 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 gap. And now I'd like to turn on the call over to Bill.

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

Bill: The non-gap financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with US gap, and now I'd like to turn on the call over to Bill. Thank you, Chris, and good afternoon, everyone. We delivered a strong second quarter, generating $115.1 million in revenue, up 34% versus the prior year, while continuing to drive operating efficiency in the business. Non-gap gross margin increased 70 basis points every year, and we again demonstrated strong leverage, with non-gap operating margin improving by over 1,300 basis points compared to the second quarter of last year. We were encouraged by the new business we won in the quarter, sales strength in the commercial and enterprise businesses, the progress of our products initiatives and AI development efforts, and the adoption of our newest channel.

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 U S. GAAP and now I'd like to turn the call over to Bill.

Speaker 2: Thank you, Chris, and good afternoon, everyone. We delivered a strong second quarter, generating $115.1 million in revenue, up 34% versus the prior year. We'll continue to drive operating efficiency in the business.

Thank you, Chris and good afternoon, everyone. We delivered a strong second quarter generating $115 $1 million in revenue up 34% versus the prior year, while continuing to drive operating efficiency in the business non-GAAP gross margin increased 70 basis points year over year, and we again demonstrated strong leverage with non-GAAP .

Speaker 2: Non-Gap Gross margin increased 70 basis points year-over-year, and we again demonstrated strong leverage, with non-Gap operating margin improving by over 1,300 basis points compared to the second quarter of last year. We were encouraged by the new business we won in the quarter, fail strength in the commercial and enterprise businesses, the progress of our product initiatives and AI development efforts, and the adoption of our newest channel. What's

Operating margin improving by over 1300 basis points compared to the second quarter of last year. We were encouraged by the new business. We won in the quarter sales strength in the commercial and enterprise businesses. The progress of our product initiatives and AI development efforts and the adoption of our newest channel whatsapp or the macro environment still presents challenges, we are effectively navigating them and remain confident.

Bill: What's that? Well, the macro environment still presents challenges. We are effectively navigating them and remain confident in our ability to drive top line growth while maintaining cost discipline and delivering on the financial targets that we have set. Brands continue to recognize the high ROI that can be achieved through personalized cross channel customer engagement delivered by the brace platform. Customer growth was solid, with our total customer count reaching 1,958, an increase of 92 during the quarter.

Speaker 2: Well the macro environments still presents challenges. We are effectively navigating them and remain confident in our ability to drive top line growth while maintaining cost discipline and delivering on the financial targets that we have set.

And our ability to drive topline growth, while maintaining cost discipline and delivering on our financial targets that we've set.

Speaker 2: Brands continue to recognize the high ROI that can be achieved through personalized cross-channel customer engagement delivered by the Braze platform. Customer growth was solid, with our total customer count reaching 1,958, an increase of 92 during the quarter. New Business wins and upsells included Miro, the National Basketball Association, Rappy and Story, among many others. The diversification of new customer wins was also impressive, with the top five new business deals all originating from entirely different types of business.

Brands continue to recognize the high ROI that can be achieved through personalized cross channel customer engagement delivered by the brace platform customer growth was solid with our total customer count reaching 1958, an increase of 92 during the quarter.

Bill: New business wins and upsells included Miro, the National Basketball Association, Rappy, and Story, among many others. The diversification of new customer wins was also impressive, with the top five new business deals all originating from entirely different types of businesses, a quick service restaurant chain, an e-commerce platform, a provider of coupons and discounts, a digital collaboration platform, and a company that connects homeowners to trade people. As those of you who have followed us closely are aware, Braze's business is highly diversified, with no single vertical contributing more than a quarter of our ARR, and many others where we have not only a significant presence, but also opportunity for growth.

New business wins and Upsells included Miro, the National Basketball Association, Rabat and story among many others. The diversification of new customer wins was also impressive with the top five new business deals all originating from entirely different types of businesses, a quick service restaurant chain and E Commerce platform, a provider of coupons and discounts of digital collaboration platform.

Speaker 2: A quick service restaurant chain, an e-commerce platform, a provider of coupons and discounts, a digital collaboration platform, and a company that connects homeowners to trade people.

And a company that connects homeowners to tradespeople.

Speaker 2: As those of you who have followed us closely are aware, Braze's business is highly diversified, with no single vertical contributing more than a quarter of our ARR, and many others where we have not only a significant presence, but also opportunity for growth. The versatility and adaptability of the Braze platform enables us adoption by any business that prioritizes investments in first-party data and customer relationships, regardless of size, vertical, or geography.

As those of you who have followed US closely are aware braces business is highly diversified with no single vertical contributing more than a quarter of our era and many others, where we have not only a significant presence, but also opportunity for growth there.

Bill: The versatility and adaptability of the Braze platform enables us adoption by any business that prioritizes investments in first-party data and customer relationships, regardless of size, vertical, or geography. As the field of customer engagement matures, we continue to weigh in against point solutions that have limited channel offerings are not real time, or simply don't scale. We are similarly making progress against legacy marketing clouds, as marketers find their fragmented solutions increasingly unfit for modern customer engagement use cases.

The versatility and adaptability of the brace platform enables us adoption by any business that prioritizes investments and first party data and customer relationships, regardless of size vertical or geography as.

Speaker 2: As the field of customer engagement matures, we continue to win against point solutions that have limited channel offerings are not real time, for simply don't scale.

As the field of customer engagement matures, we continue to win against point solutions that have limited channel offerings are not real time for simply don't scale.

Speaker 2: We are similarly making progress against legacy marketing clouds. As marketers find their fragmented solutions increasingly unfit for modern customer engagement use case.

We are similarly, making progress against legacy marketing clouds as marketers find their fragmented solutions increasingly unfit for modern customer engagement use cases.

Bill: This quarter, we displaced legacy marketing clouds at numerous enterprises, including at a top quick service restaurant chain, a large consumer discounter, and a well-known travel company. In the case of the restaurant chain, a global systems integrator partner was instrumental in the sales cycle, and will be working with the customer to complete onboarding and provide ongoing marketing and data services. As we continue to expand our product surface area and enhance its capabilities by infusing AI throughout our stack, we're helping Braze create personalized cross-channel solutions faster than ever before, speeding the rotation of the imagined create-in-a-volve loop that lets them compound learnings and increase their ROI over time.

Speaker 2: This quarter, we displaced legacy marketing clouds at numerous enterprises, including at a top quick service restaurant chain, a large consumer discounter, and a well-known travel company.

This quarter, we displace legacy marketing clouds, and numerous enterprises, including at a top quick service restaurant chain, a large consumer discounter and a well known travel company.

Speaker 2: In the case of the restaurant chain, a global systems integrator partner was instrumental in the sales cycle and will be working with the customer to complete onboarding and provide ongoing marketing and data service.

In the case of the restaurant chain, a global systems integrator partner was instrumental in the sale cycle and we'll be working with the customer to complete onboarding and provide ongoing marketing and data services.

Speaker 2: As we continue to expand our products surface area and enhance its capabilities by infusing AI throughout our stack, we're helping brands create personalized cross-channel solutions faster than ever before, speeding the rotation of the Imagine Create In-Avolve Loop that lets them compound learnings and increase their ROI over time. Meanwhile, the legacy clouds continue to be held back by antiquated data foundations and complex siloed architectures, limiting their innovation and causing them to fall further behind.

As we continue to expand our product surface area and enhance its capabilities by infusing AI throw out or sack were helping brands create personalized cross channel solutions faster than ever before speeding the rotation of the imagine create and evolve loop that lets them compound learnings and increase their ROI over time.

Bill: Meanwhile, the legacy clouds continue to be held back by antiquated data foundations and complex siloed architectures, limiting their innovation and causing them to fall further behind. We believe our product innovation and R&D focus, coupled with their relative stasis, will accelerate the legacy replacement cycle and compel more enterprises to upgrade to the personalized cross-channel customer engagement enabled by the Braze platform. We also continue to benefit from the vendor consolidation trend we've called out the last couple of quarters, as brands look to an all-in-one platform to coordinate messaging across the growing array of B to C channels and accelerate their investments in the first-party data.

Meanwhile, the legacy clouds continue to be held back by antiquated data foundations and complex siloed architectures, limiting their innovation and causing them to fall further behind.

Speaker 2: We believe our product innovation and R&D focus coupled with their relative spaces. We'll accelerate the legacy replacement cycle and compel more enterprises to upgrade to the personalized cross-genal customer engagement enabled by the Braze platform.

We believe our product innovation and R&D focus coupled with their relative stasis will accelerate the legacy replacement cycle and compel more enterprises to upgrade to the personalized cross channel customer engagement enabled by the brace platform.

Speaker 2: We also continue to benefit from the vendor consolidation trend we've called out the last couple of quarters, as brands look to an all-in-one platform to coordinate messaging across the growing array of B2C channels, and accelerate their investments in the first-party data.

We also continue to benefit from the vendor consolidation trend we've called out the last couple of quarters as brands look to an all in one platform to coordinate messaging across the growing array of BTC channels and accelerate their investments in the first party data.

Bill: In the case of an accessories retailer, we replaced four separate vendors, providing a great example of how Braze wins on technical integration capabilities, aligning with the customer's vision of working with a comprehensive, best-in-class customer engagement platform. We believe this trend will continue as customers look to capitalize on new AI-driven advancements and customer engagement, an area of innovation which benefits tremendously from the breadth of Braze's data footprint and messaging flexibility, as well as our real-time stream processing architecture.

Speaker 2: In the case of an accessories retailer, we replaced four separate vendors, providing a great example of how Braze wins on technical integration capabilities, aligning with the customer's vision of working with a comprehensive, best-in-class customer engagement plan.

In the case of and accessories retailer, we replaced four separate vendors, providing a great example of how braze wins on technical integration capabilities aligning with our customers vision of working with a comprehensive best in class customer engagement platform. We believe this trend will continue as customers look to capitalize on new AI, driven advancements in customer engagement and area of innovation, which benefits tremendous.

Speaker 2: We believe this trend will continue if customers look to capitalize on new AI driven advancements and customer engagement. An area of innovation, which benefits tremendously from the breadth of braze's data footprint and messaging flexibility, as well as our real-time stream processing architecture.

Lee from the breath of braces data footprint and messaging flexibility as well as our real time stream processing architecture.

Bill: At Braze, we are constantly evaluating new ways for brands to communicate directly with their customers by delivering more relevant content and engaging experiences in the channels that resonate most. In March of this year, we launched a native WhatsApp integration that enables marketers to create, orchestrate, and send WhatsApp campaigns directly from the Braze platform. With more than 2 billion active users in 2022, broad international penetration and the ability to engage in content-rich conversations that build retention and loyalty, WhatsApp is a highly valuable addition to our cross-channel portfolio.

Speaker 2: At Braze, we are constantly evaluating new ways for brands to communicate directly with their customers by delivering more relevant content and engaging experiences in the channels that resonate most.

At Braves were constantly evaluating new ways for brands to communicate directly with their customers by delivering more relevant content and engaging experiences and the channels that resonate most in.

Speaker 2: In March of this year, we launched a native WhatsApp integration that enables marketers to create, orchestrate and send WhatsApp campaigns directly from the Brace platform.

In March of this year, we launched it native Whatsapp integration that enables marketers to create orchestrate and sand whatsapp campaigns directly from the brace platform with more than 2 billion active users in 2022 broad international penetration and the ability to engage in content rich conversations that build retention and loyalty Whatsapp is a highly valuable addition to our cross channel portfolio and I'm happy to Rip.

Speaker 2: With more than 2 billion active users in 2022, brought international penetration and the ability to engage in content-rich conversations that build retention and loyalty, WhatsApp is a highly valuable addition to our cross-channel portfolio. And I'm happy to report that new and existing customers have responded very favorably to our offering. With dozens of customers using the channel and a fast growing pipeline.

Bill: And I'm happy to report that new and existing customers have responded very favorably to our offering, with dozens of customers using the channel and a fast-growing pipeline. One early WhatsApp success story I'd like to highlight is Rappi, one of the most popular and trusted technology companies in Latin America. Rappi's expanded investment in Braze, specifically adding WhatsApp as an additional channel to its innovative customer engagement strategy that already included email, SMS, push, and in-app messaging.

Port that new and existing customers have responded very favorably to our offering with dozens of customers using the channel and a fast growing pipeline.

Speaker 2: One early WhatsApp success story I'd like to highlight is RAPI. One of the most popular and trusted technology companies in Latin America.

One early Whatsapp success story I'd like to highlight is rappee one of the most popular and trusted technology companies in Latin America Rockies expand its investment in braze, specifically, adding whatsapp as an additional channel to its innovative customer engagement strategy that already included email SMS push and in our messaging.

Speaker 2: Rappies expanded its investment in braze, specifically adding WhatsApp as an additional channel to its innovative customer engagement strategy that already included email, SMS, push, and an SMS.

Speaker 2: Rappy was looking for a more effective out-of-product channel to directly reach their audience. And successfully leverage WhatsApp to motivate lapsed users to return to the app, to make new purchases, and to drive active users to make more purchases over time.

Bill: Rappi was looking for a more effective out-of-product channel to directly reach their audience, and successfully leverage WhatsApp to motivate lapsed users to return to the app to make new purchases and to drive active users to make more purchases over time. Leveraging WhatsApp embraces Canvas environment, Rappi was able to drive an 80% uplift in purchases versus a control group that received only push notifications and email. Case studies such as these demonstrate how marketers can immediately leverage the flexibility of Canvas and the power of our streaming architecture with new channels like WhatsApp to target, personalize, and orchestrate sophisticated campaigns that drive high engagement and ROI.

He was looking for a more effective out of product channel to directly reach their audience and successfully leverage whatsapp to motivate lapsed users to return to the app to make new purchases and to drive active users to make more purchases over time.

Speaker 2: Leveraging WhatsApp and braces Canvas environment, Rappi was able to drive an 80% uplift in purchases versus a control group that received only push notifications and email.

Leveraging whatsapp embraces campus environment wrap he was able to drive an 80% uplift in purchases versus a control group that received only push notifications and email.

Speaker 2: Case studies such as these demonstrate how marketers can immediately leverage the flexibility of Canvas and the power of our streaming architecture with new channels like WhatsApp to target personalized and orchestrated campaigns that drive high engagement and ROI.

Case studies, such as these demonstrate how marketers can immediately leverage the flexibility of canvas and the power of our streaming architecture with new channels like whatsapp to target personalized and orchestrate sophisticated campaigns that drive high engagement and ROI.

Speaker 2: Beyond additional channels, we continue to improve and enhance our competitive mode by expanding our product surface area and deepening our existing capabilities, particularly around data management and governance.

Bill: Beyond additional channels, we continue to improve and enhance our competitive mode by expanding our product surface area and deepening our existing capabilities, particularly around data management and governance. Yesterday, we announced new data transformation and integration options to enable brands to get data into Braze quickly and easily, with less ongoing maintenance burden and lower lift from technical teams. I won't go through all of these enhancements in detail, but I'll mention a few key innovations that we believe will be particularly impactful for customers.

Beyond additional channels, we continue to improve and enhance our competitive moat by expanding our product surface area and deepening our existing capabilities, particularly around data management and governance.

Bill: First, is data transformations. A feature that gives brands the ability to easily map incoming data from third-party services onto Braze user profiles. Even more exciting, the code that defines these transformations can be automatically generated using a generative AI capability within our Sage AI suite. Second, we are expanding cloud data ingestion to include an integration with Databricks' Lakehouse platform while expanding the capabilities of our existing integrations into the Snowflake data cloud, Amazon Redshift, and Google BigQuery.

Speaker 2: Yesterday, we announced new data transformation and integration options to enable brands to get data into Brace quickly and easily with less ongoing maintenance burden and lower lift from technical

Yesterday, we announced new data transformation and integration options to enable brands to get data into brace quickly and easily with less ongoing maintenance burden and lower lift from technical teams I won't go through all of these enhancements in detail, but I'll mention a few key innovations that we believe will be particularly impactful for customers. First is data transformations are feature that gives brands the ability to.

Speaker 2: I won't go through all these enhancements in detail, but I'll mention a few key innovations that we believe will be particularly impactful for customers.

Speaker 2: First is data transformations. A feature that gives brands the ability to easily map incoming data from third party services onto braze user profiles. Even more exciting, the code that defines these transformations can be automatically generated using a generative AI capability within our Sage AI suite.

Usually map incoming data from third party services onto Braves user profiles, even more exciting the code that defines these transformations can be automatically generated using a generative AI capability within our Sage AI suite.

Speaker 2: Second, we are expanding cloud data ingestion to include an integration with Databricks' Lakehouse platform. We'll expanding the capabilities of our existing integrations into the Snowflake data cloud, Amazon Redshift, and Google BigQuery.

Second we are expanding cloud data ingestion to included integration with data bricks is lake house platform, while expanding the capabilities of our existing integrations into the snowflake data cloud Amazon redshift and Google Big query.

Bill: This flexible data ingestion capability helps customers reduce total cost of ownership in their data ecosystem by eliminating complexities when accessing their first-party data. Third, we infuse generative AI into our query builder and SQL segment extension tools to empower teams to easily transform natural language prompts into insightful reports and audience segments. SQL segment extensions itself is a recently released addition to our classification layer that enables comprehensive and flexible targeting on top of a customer's entire Braze data set, enabling marketers to execute on more advanced targeting use cases completely within Braze instead of relying on their in-house data teams or third-party tools.

Speaker 2: This flexible data ingestion capability helps customers reduce total cost of ownership in their data ecosystem by eliminating complexities when accessing their first party data.

This flexible data ingestion capability helps customers reduce total cost of ownership and their data ecosystem by eliminating complexities when accessing their first party data.

Speaker 2: Third, we infuse generative AI into our query builder and SQL segment extension tools to empower teams to easily transform natural language prompts into insightful reports and audience segments.

Third we infused generative AI into our query builder and sequel segment extension tools to empower teams to easily transform natural language prompts into insightful reports and audience segments.

Speaker 2: Tegal segment extensions itself is a recently released addition to our classification layer that enables comprehensive and flexible targeting on top of a customer's entire braze data set. Enabling marketers to execute on more advanced targeting use cases completely within braze, instead of relying on their in-house data teams or their party tools.

Segment extensions itself is a recently released edition to our classification layer that enables comprehensive and flexible targeting on top of our customers' entire brands dataset, enabling marketers to execute on more advanced targeting use cases completely within braze instead of relying on their in house data teams are third party tools.

Speaker 2: Leveraging these advancements, brands will be able to easily access and activate their valuable first-party data to power personalized customer engagement strategies that enhance loyalty, retention, and revenue.

Bill: Leveraging these advancements, brands will be able to easily access and activate their valuable first-party data to power personalized customer engagement strategies that enhance loyalty, retention, and revenue. We also recently launched Braze Instant Insights, a Snowflake native app that provides turnkey visualizations for analysis use cases like attribution, high-value actions, retention, and investigating monetary value across cohorts. In the same way that we built Snowflake data sharing to reduce the effort and time to value for customers building outgoing data pipelines from Braze, Instant Insights reduces the effort to go from data in the warehouse to sophisticated reporting.

Leveraging these advancements brands will be able to easily access and activate their valuable first party data to power personalized customer engagement strategies that enhance loyalty retention and revenue.

Speaker 2: We also recently launched Braze Instant Insights, a snowflake native app that provides turnkey visualizations for analysis use cases, like attribution, high value actions, retention, and investigating monetary value across cohorts. In the same way that we built snowflake data sharing to reduce the effort and time to value for customers building outgoing data pipelines from Braze, Instant Insights reduces the effort to go from data in the warehouse to sophisticated reporting.

We also recently launched sprays instant insights a snowflake native App that provides turnkey visualizations for analysis use cases like attribution high value actions retention and investigating monetary value across cohorts.

In the say built snowflake data sharing to reduce the effort and time to value for customers building outgoing data pipelines from braised instant insights reduces the effort to go from data in the warehouse to sophisticated reporting.

Bill: And in June, we announced STJI, a set of advanced AI and ML capabilities integrated into the Braze platform. STJIs designed to enhance marketer productivity will powering better and more effective customer engagement results. The most recent additions to SAGE included three main innovations. First, an AI recommendation engine that utilizes a custom-trained transformer model to match items from Braze catalogs with customers most likely to buy them, providing content personalization that outperforms competing techniques in our tests.

Speaker 2: And in June , we announced Stage AI, a set of advanced AI and ML capabilities integrated into the Braze platform. Stage AI is designed to enhance marketer productivity while powering better and more effective customer engagement results. The most recent additions to Sage included three main innovations. First, an AI recommendation engine that utilizes a custom train transformer model to match items from Braze catalogs with customers most likely to buy them, providing content personalization that outperforms competing techniques in our test.

And in June we announced Sage AI, a set of advanced AI and ml capabilities integrated into the <unk> platform Sage AI is designed to enhance marketer productivity will powering better and more effective customer engagement results. The most recent additions to stage included three main innovations burst and AI recommendation engine that utilizes accustomed trained transformer.

Model to match items from brace catalogs with customers, most likely to buy them, providing content personalization that outperforms competing techniques in our tests.

Bill: We believe this feature, which will become a separate skew, will boost campaign revenue and improve customer loyalty for the brands that use it. Second, our AI Content QA tool that leverages OpenAI's GPT-4 to check messages for tone, structure, grammar, and appropriate language was promoted into general availability and has now been used by hundreds of brands. We're seeing the advantage of being early movers in generative AI as we're quickly expanding beyond obvious use cases and integrating capabilities that are finely tuned to marketer workflows.

Speaker 2: We believe this feature, which will become a separate skew, will boost campaign revenue and improve customer loyalty for the brands that use it.

We believe this feature which will become a separate SKU will boost campaign revenue and improved customer loyalty for the brands that use it.

Speaker 2: Second, our AI content QA tool that leverages open AI's GPT-4 to check messages for tone, structure, grammar, and appropriate language was promoted into general availability and has now been used by hundreds of brands. We're seeing the advantage of being early movers in generative AI as we're quickly expanding beyond obvious use cases and integrating capabilities that are finally tuned to market or workflow.

Bill: Third, we added winning path to Canvas, our visual development environment which marketers use as a no-code journey orchestration tool. This feature automatically optimizes how customers flow through paths into Canvas, allowing brands to boost conversions with a single click. Finally, we were refining an AB test prediction feature, designed to use a combination of large language models and other neural network architectures to automatically predict the winner of an AB test without a pilot send, helping marketers execute on new experiments more efficiently and improving their overall performance.

Second our AI content QA tool that Leverages open a ice GPT for to check messages for tone structure grammar and appropriate language was promoted into general availability and has now been used by hundreds of brands. We're seeing the advantage of being early movers and generative AI as we're quickly expanding beyond the obvious use cases and integrating capabilities that are finely tuned tomorrow.

Or workflows.

Speaker 2: Third, we added winning path to Canvas, our visual development environment, which marketers use as a no-code journey orchestration.

Third we added winning path to Candace, our visual development environment, which marketers use as a no code journey orchestration tool. This feature automatically optimizes, how customers flow through pops in a canvas, allowing brands to boost conversions with a single click.

Speaker 2: This feature automatically optimizes how customers blow through paths in a canvas, allowing brands to boost conversions with a single click. Finally, we were refining an A-B test prediction feature designed to use a combination of large language models and other neural network architectures to automatically predict the winner of an A-B test without a pilot's end, helping marketers execute on new experiments more efficiently and improving their overall performance.

Finally, we are refining and a b tests prediction feature designed to use a combination of large language models and other neural network architectures to automatically predict the winter of an a b test without a pilot sent helping marketers execute on new experiments more efficiently and improving their overall performance.

Lawrence: Lawrence. Finally, I wanted to update you on our social impact initiatives. In July, Braze published a second annual ESG report. This report included our FY23 greenhouse gas emissions audit, an overview of our diversity, equity, and inclusion activities, and details on our grant-making efforts as part of our Pledge 1% equity donation program. Our social impact mission is to amplify employee impact to create opportunity for underserved groups within our communities and to accelerate science-based climate solutions. We look forward to growing these efforts to continue to employ advocacy and participation over time. Thank you to our customers, team members and shareholders for your continued support of Braze.

Speaker 2: Finally, I wanted to update you on our social impact initiatives. In July , Braze published its second annual ESG report. This report included our FY23 greenhouse gas emissions audit, an overview of our diversity, equity, and inclusion activities, and details on our grant-making efforts as part of our Pledge 1% equity donation program.

Finally, I wanted to update you on our social impact initiatives in July brace published its second annual ESG report. This report included our FY2023 greenhouse gas emissions on it an overview of our diversity equity and inclusion activities and details on our Grantmaking efforts as part of our pledge, 1% equity donation program, our social impact mission is to.

Speaker 2: Our social impact mission is to amplify employee impact to create opportunity for underserved groups within our communities and to accelerate science-based climate.

Amplify employee impact to and create opportunity for underserved groups within our communities and to accelerate science based climate solutions. We look forward to growing these efforts through continued employee advocacy and participation overtime.

Speaker 2: We look forward to growing these efforts to continue to employ advocacy and participation over

Speaker 2: Thank you to our customers, team members, and shareholders for your continued support of Braze. We are excited about our path ahead and believe the investments in our products, people, and ecosystem, combined with strong secular tailwinds, position braze to become the industry standard for customer engagement. And now I'll turn the call over to Isabelle.

Thank you to our customers team members and shareholders for your continued support of brace. We were excited about our path ahead and believe the investments in our product people and ecosystem combined with strong secular tailwind position brace to become the industry standard for customer engagement and now I'll turn the call over to Isabella.

Bill: We are excited about our path ahead and believe the investments in our product, people, and ecosystem combined with strong secular tailwinds, position Braze to become the industry standard for customer engagement.

Isabelle: And now, I'll turn the call over to Isabelle. Thank you, Bill, and thank you everyone for joining us today. As Bill mentioned, we reported a strong second quarter with revenue up 34% year-over-year to $115.1 million. This was driven by a combination of existing customer contract expansion, renewals, and new business. Our acquisition of North Star closed on June 1 and contributed nearly $2 million of revenue in the quarter. Our subscription revenue remains the primary component of our total top line, contributing 95% of our second quarter revenue.

Speaker 2: Thank you, Bill, and thank you everyone for joining us today. As Bill mentioned, we reported a strong second quarter with revenue up 34% year-over-year to $115.1 million. This was driven by a combination of existing customer contract expansion, renewals, and new business.

Thank you Bill and thank you everyone for joining us today as Bill mentioned, we reported a strong second quarter with revenue up 34% year over year to $115 $1 million. This was driven by a combination of existing customer contract expansion renewals and new business our acquisition of Northstar closed on June one.

Speaker 2: Our acquisition of North Star closed on June 1 and contributed nearly $2 million of revenue in the quarter.

And contributed nearly $2 million of revenue in the quarter. Our subscription revenue remains the primary component of our total topline contributing 95% of our second quarter revenue. The remaining 5% represents a combination of recurring professional services and one time configuration and onboarding fees.

Speaker 2: Our subscription revenue remains the primary component of our total top line, contributing 95% of our second quarter revenue. The remaining 5% represents a combination of recurring professional services and one time configuration and onboard.

Isabelle: The remaining 5% represents a combination of recurring professional services and one-time configuration and onboarding fees. Total customer count increased 22% year-over-year to 1,958 customers as of July 31. Up 359 from the same period last year and up 92 from the prior quarter. Our total number of large customers, which we define as those spending at least $500,000 annually, grew 24% year over year to 173, and as of July 31, contributed 57% to our total ARR.

Speaker 2: Total customer count increased 22% year-over-year to 1,958 customers as of July 31. Up 359 from the same period last year and up 92 from the prior quarter. Our total number of large customers, which we define as those spending at least $500,000 annually, grew 24% year-over-year to 173. And as of July 31, contributed 57% to our total ARR.

Total customer count increased 22% year over year to 1958 customers as of July 31 up 359 from the same period last year and up 92 from the prior quarter. Our total number of large customers, which we define as those spending at least $500000 annually grew 24% year over year to 107.

Three and as of July 31 contributed 57% to our total <unk>.

Speaker 2: This compares to a 55% contribution as of the same quarter-lapse.

Isabelle: This compares to a 55% contribution as of the same quarter last year. Measured across all customers, dollar-based net retention was 120%, while dollar-based net retention for our large customers was 123%. Expansion was, again, broadly distributed across industries and geographic regions. Consistent with the prior quarter, revenue outside the U.S, contributed 43% of our total revenue in the second quarter. In the second quarter, our total remaining performance obligation was 524 million dollars. Up 28% year-over-year and up 10% sequentially.

This compares to a 55% contribution as of the same quarter last year.

Speaker 2: Measured across all customers, dollar-based net retention was 120%. While dollar-based net retention for our large customers was 123...

Measured across all customers dollar based net retention was 120% while dollar based net retention for our large customers was 123% expansion was again broadly distributed across industries and geographic regions consistent with the prior quarter revenue outside the U S contributed 43% of our total revenue in the second quarter.

Speaker 2: The expansion was again broadly distributed across industries and geographic regions. Consistent with the prior quarter, revenue outside the US contributed 43% of our total revenue in the second.

Speaker 2: In the second quarter, our total remaining performance obligation was $524 million. Up 28% year-over-year and up 10% sequench.

In the second quarter, our total remaining performance obligation was $524 million up 28% year over year and up 10% sequentially current RPI was $353 million up 29% year over year and up 9% sequentially. The year over year increases were driven by contract renewals and.

Speaker 2: Current RPO was $353 million, up 29% year over year, and up 9% sequenced.

Isabelle: Current RPO was $353 million, up 29% year-over-year and up 9% 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. Non-gap growth profit in the quarter was $80.6 million, representing a non-gap growth margin of 70%. This compares to a non-gap growth profit of $59.7 million and non-gap growth margin of 69.3% in the second quarter of last year.

Speaker 2: The year-over-year increases were driven by contract renewals and upsells and the signing of new customer contracts.

Upsells and the signing of new customer contracts overall dollar weighted contract length remains at approximately two years.

Speaker 2: Overall dollar weighted contract length remains that approximately two years.

Speaker 2: Non-gap gross profit in the quarter was $80.6 million, representing a non-gap gross margin of 70%. This compares to a non-gap gross profit of $59.7 million, and non-gap gross margin of 69.3% in the second quarter of last.

non-GAAP gross profit in the quarter was $80.6 million, representing a non-GAAP gross margin of 70%. This compares to a non-GAAP gross profit of $59 $7 million and non-GAAP gross margin of 69, 3% in the second quarter of last year.

Isabelle: The 70 basis points year-over-year margin improvement was driven by ongoing efficiencies related to personnel cost and continued economies of scale in our core technology expenses. Non-gap sales and marketing expense was $51.8 million or 45% of revenue compared to $44.3 million or 51% of revenue in the prior year While the dollar increase reflects our year-over-year investments 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.

Speaker 2: The 70 basis points year-over-year margin improvement was driven by ongoing efficiencies related to personnel cost and continued economies of scale in our core technology.

The 70 basis points year over year margin improvement was driven by ongoing efficiencies related to personnel cost and continued economies of scale in our core technology expenses.

Speaker 2: Non-gap sales and marketing expense was $51.8 million, or 45% of revenue compared to $44.3 million, or 51% of revenue in the prior year quarter.

non-GAAP sales and marketing expense was $51.8 million or 45% of revenue compared to $44 $3 million or 51% of revenue in the prior year quarter.

Speaker 2: While the dollar increase reflects our year-over-year investments 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 organizations.

While the dollar increase reflects our year over year investments in head count 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.

Speaker 2: Non-GAP R&D expense was $18.9 million or 16% of revenue compared to $16.3 million or 19% of revenue in the prior year quarter. The dollar increase was primarily driven by increased headcount cost to support the expansion of our existing offerings as well as to develop new products and features to drive growth. Non-GAP DNA expense was $17.4 million or 15% of revenue compared to $16.5 million or 19% of revenue in the prior year quarter.

Isabelle: Non-dap R&D expense was $18.9 million or 16% of revenue compared to $16.3 million or 19% of revenue in the prior year quarter. The dollar increase was primarily driven by increased headcount costs to support the expansion of our existing offerings, as well as to develop new products and features to drive growth. Non-dap R&D expense was $17.4 million or 15% of revenue compared to $16.5 million or 19% of revenue in the prior year quarter.

non-GAAP R&D expense was $18 $9 million or 16% of revenue compared to $16 $3 million or 19% of revenue in the prior year quarter.

The dollar increase was primarily driven by increased head count costs 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 $17 $4 million or 15% of revenue compared to $16 $5 million or 19% of revenue in the prior year quarter.

Speaker 2: The dollar increase was driven by investments to support our overall company growth, including headcount costs and increases in software subscriptions and lights.

Isabelle: The dollar increase was driven by investments to support our overall company growth, including headcount costs and increases in software subscriptions and licenses. Non-dap operating loss was $7.6 million compared to a non-dap operating loss of $17.5 million in the prior year quarter. Non-dap net loss attributable to Braze shareholders in the quarter was $3.9 million or a loss of $4 per share compared to a loss of $15.2 million or a loss of $16 per share in the prior year quarter.

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

Speaker 2: Non-Gap operating loss was $7.6 million compared to a non-Gap operating loss of $17.5 million in the prior year court.

non-GAAP operating loss was $7 $6 million compared to a non-GAAP operating loss of $17 $5 million in the prior year quarter.

Speaker 2: Non-gap net loss attributable to braze shareholders in the quarter was $3.9 million or a loss of 4 cents per share compared to a loss of $15.2 million or a loss of $16.4 in the prior year quarter. Now turning...

non-GAAP net loss attributable to <unk> shareholders in the quarter was $3 $9 million or a loss of four cents per share compared to a loss of $15 $2 million or a loss of <unk> 16 per share in the prior year quarter.

Isabelle: Now turning to the balance sheet and cashless statement, we ended the quarter with $476.2 million in cash, cash equivalence, restricted cash and marketable securities. Cash used in operation during the quarter was $17.5 million compared to $16.2 million. Taking into consideration the cash impact of capitalized costs, free cash flow was negative $18.7 million compared to negative free cash flow of $24.7 million in the prior year quarter. The improvement in free cash flow is primarily due to lower capital expenditures compared to the prior year quarter, which included capex for a London office expansion.

Now turning to the balance sheet and cashless statement, we ended the quarter with $476 $2 million in cash cash equivalents restricted cash and marketable securities.

Speaker 2: We ended the quarter with $476.2 million in cash, cash equivalence, restricted cash, and marketable

Speaker 2: Cash used an operation during the quarter with $17.5 million compared to $16.3 million in the prior year quarter. Taking into consideration the cash impact of capitalized costs, free cash flow was negative $18.7 million compared to negative free cash flow of $24.7 million in the prior year quarter. The improvement in free cash flow is primarily due to lower capital expenditures compared to the prior year quarter, which included cat-backs for a London office expansion.

Cash used in operations during the quarter was $17 $5 million compared to $16 $3 million in the prior year quarter, taking into consideration the cash impact of capitalized costs free cash flow was negative $18 $7 million compared to negative free cash flow of $24 $7 million in the prior year quarter the improvement in free cash flow is.

Early due to lower capital expenditures compared to the prior year quarter, which included Capex for our London office expansion.

Isabelle: Now turning to our forecast, we're encouraged by the strong first half of the fiscal year, demand for high quality customer engagement solutions remain solid and we're optimistic in our ability to execute against our long term financial targets. We intend to maintain cost discipline and reiterate that we believe that we are well positioned to achieve a non-dap operating margin of better than negative 7% in Q4 of this year. For the third quarter, we expect revenue to be in the range of $116.5 to $117.5 million, which represents a year-over-year growth rate of approximately 26% at the midpoint.

Now turning to our forecast we're encouraged by the strong first half of the fiscal year demand for high quality customer engagement solutions remained solid and were optimistic in our ability to execute against our long term financial targets we.

Speaker 2: we're encouraged by the strong first half of the fiscal year. Demand for high quality customer engagement solutions remains solid, and we're optimistic in our ability to execute against our long term financial targets.

Speaker 2: We intend to maintain cost discipline and reiterate that we believe that we are well positioned to achieve a non-gap operating margin of better than negative 7% in Q4.

We intend to maintain cost discipline and reiterate that we believe that we are well positioned to achieve non-GAAP operating margin of better than negative 7% in Q4 of this year.

Speaker 2: For the third quarter, we expect revenue to be in the range of $116.5 to $117.5 million, which represents a year-over-year growth rate of approximately 26% at $117.5 million.

For the third quarter, we expect revenue to be in the range of $116.5 million to $117.5 million, which represents a year over year growth rate of approximately 26% at the midpoint for the third quarter non-GAAP operating loss is expected to be in the range of 15.5 to $16 $5 million at the midpoint.

Speaker 2: For the third quarter, non-GAAP operating loss is expected to be in the range of $15.5 to $16.5 million.

Isabelle: For the third quarter, non-dap operating loss is expected to be in the range of $15.5 to $16.5 million. At the midpoint, this implies an operating margin of negative 13.7%. The sequential reduction in non-dap operating margin relative to Q2 is driven by one-time expenses related to the company's annual customer conference forage, as well as other sales and marketing expenses related to sales enablement, which will be concentrated in Q3 and are not projected to materially impact Q4.

Speaker 2: At the midpoint, this implies an operating margin of negative 13.7.

This implies an operating margin of negative $13, 7% the sequential.

Speaker 2: The sequential reduction in non-gap operating margin relative to Q2 is driven by one time expenses related to the company's annual customer conference forage, as well as other sales and marketing expenses related to sales enablement, which will be concentrated in Q3 and are not projected to materially impact Q4.

Reduction in non-GAAP operating margin relative to Q2 is driven by one time expenses related to the Companys annual customer conference forge as well as other sales and marketing expenses related to sales enablement, which will be concentrated in Q3 and are not projected to materially impact Q4.

Isabelle: Third quarter, non-dap net loss is expected to be $13.14 million, and third quarter, non-dap net loss per share in the range of $13.14 per share, based on approximately $100.2 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 $451.5 to $454.5 million, which represents a year-over-year growth rate of approximately 27% at the midpoint. Fiscal Year 2024 non-gap operating loss is expected to be in the range of 47 to 49 million dollars.

Speaker 2: Third quarter non-gap net loss is expected to be 13 to 14 million dollars. And third quarter non-gap net loss per share in the range of 13 to 14 cents per share. Based on approximately 100.2 million weighted average basic shares outstanding during the...

Third quarter non-GAAP net loss is expected to be $13 million to $14 million and third quarter non-GAAP net loss per share in the range of 13 to 14 per share based on approximately $100 2 million weighted average basic shares outstanding during the period for.

Speaker 2: For the full fiscal year 2024, we expect total revenue to be in the range of $451.5 to $454.5 million, which represents a year-over-year growth rate of approximately 27% at the mid-

For the full fiscal year 'twenty 'twenty four we expect total revenue to be in the range of 451.5 to $454 $5 million, which represents a year over year growth rate of approximately 27% at the midpoint fiscal.

Speaker 2: fiscal year 2024 non-gap operating loss is expected to be in the range of 47 to 49 million dollars. Non-gap net loss for the same period is expected to be in the range of 37 million to 39 million dollars.

Fiscal year 'twenty 'twenty four non-GAAP operating loss is expected to be in the range of $47 million to $49 million non-GAAP net loss for the same period is expected to be in the range of 37 million to $39 million fiscal year 'twenty 'twenty four non-GAAP net loss per share is expected to be 37 to 39 cents per share based on a.

Isabelle: Non-gap net loss for the same period is expected to be in the range of 37 million to 39 million dollars. Fiscal Year 2024 non-gap net loss per share is expected to be 37 to 39 cents per share based on a full year weighted average basic share count of approximately 98.8 million shares. Fiscal Year 2020 non-gap operating income and free cash flow margins in the coming quarters. We reiterate that we expect Braze will achieve positive quarterly non-gap operating income and positive quarterly free cash flow by the end of the fiscal year ended January 31, 2025.

Speaker 2: This school year, 2024, non-gap net loss per share is expected to be 37 to 39 cents per share. Based on a full year weighted average basic share count of approximately 98.8 million.

Full year weighted average basic share count of approximately $98 8 million shares.

Speaker 2: We remain committed to driving revenue growth while improving operating income and free cash flow margins in the coming quarters. We reiterate that we expect braze will achieve positive quarterly non-gap operating income and positive quarterly free cash flow by the end of the fiscal year ended, January 31, 2025. I'll conclude my remarks by reiterating our excitement in braze.

We remain committed to driving revenue growth, while improving operating income and free cash flow margins in the coming quarters. We reiterate that we expect Braves will achieve positive quarterly non-GAAP operating income and positive quarterly free cash flow by the end of the fiscal year ended January 31, 2025, I'll conclude my remarks by reiterating our excitement in Brazos future.

Bill: I'll conclude my remarks by reiterating our excitement in Braze's future. We remain focused on partnering with our customers to deliver best in-class customer engagement and growing our top line while maintaining cost discipline to achieve our long-term financial targets. And with that, we'll now open the call for questions.

Speaker 2: We remain focused on partnering with our customers to deliver best-in-class customer engagement and growing our top line while maintaining cost discipline to achieve our long-term financial targets. And with that, we'll now open the call for questions. Operator, please begin the Q&A.

We remain focused on partnering with our customers to deliver best in class customer engagement and growing our top line, while maintaining cost discipline to achieve our long term financial targets and with that we'll now open the call for questions. Operator, please begin the Q&A.

Operator: Operator, please begin the Q&A. We will now begin the Q&A session. If you would like to ask a question, please use the raise hand feature at the bottom of your screen window.

Ryan Macwilliams: Our first question comes from Ryan McWilliams with Farplees. Please unmute your audio and ask your question. Thank you for the question.

Speaker 3: We will now begin the Q&A session. If you would like to ask a question, please use the raise hand feature at the bottom of your skin window.

We will now begin the Q&A session. If you would like to ask a question. Please use the regime's feature at the bottom.

We now.

Speaker 3: Our first question comes from Brian McWilliams with Farglies. Please unmute your audio and ask your question.

Our first question comes from Ryan Macwilliams with Barclays. Please on mute your audio and ask your question.

Speaker 4: Thank you for saving questions. For Bill, let us see the improvement in month monthly active user growth this quarter. I know that's not a perfect metric, but we'll love your thoughts on where your customers usage and marketing spend currently spend at this point in the year. Like, are they becoming more willing to make growth investments at this point? Or is it more stabilization? We'll love your thoughts here. Thanks.

Thanks, taking the question for Bill, let us see the improvement in monthly active user growth. This quarter I know, that's not a perfect metric, but would love your thoughts on where your customers' usage and marketing spend currently stand at this point in the year like are they becoming more willing to make growth investments at this point or is it more stable.

Bill: For Bill, let us see the improvement in month monthly active user growth this quarter. I know that's not a perfect metric, but we'll love your thoughts on where your customers usage and marketing spend currently stand at this point in the year. Like are they becoming more willing to make growth investments at this point or is it more stabilization? We'll love your thoughts here. Thanks. So I think overall throughout the year, we've seen pretty consistent conditions for our customers and just broadly around the macro.

<unk> will love your thoughts there thanks.

Speaker 5: So I think overall throughout the year, we've seen pretty consistent conditions for our customers and just broadly around the macro. And we're seeing that same consistency around the globe. Everyone's experiencing pretty similar and straight conditions. A lot of marketers are operating with flat or frozen budgets. And so, well, we've been really happy with our execution through the environment. We obviously highlighted the new business growth. We've been really happy with the diversification of new customers that are coming in. And I also do think that we've got some gas in the tank from the perspective of a lot of the product expansion that's happened, a lot, the WhatsApp launch. We've been happy with the traction there, but in an environment where marketers in general are sitting on frozen budgets, a lot of scrutiny from procurement, a lot of scrutiny from their CFOs. The opportunity for a new product launch like that or expansion to continue to really see its full potential is going to be more limited. And so, we're from the beginning of the year. We need to be challenging and unpredictable. I'd say that conditions broadly haven't improved, but they also haven't gotten worse. And we've been really happy with the execution that we've seen across the company. We've strengthened a lot of the foundations both in our products as well as in our go-to-market strategy and our sales organization. And we've been really focused for setting up the organizations for our path to ability to narrow our, but it is definitely still challenging out there.

So I think overall throughout the year, we've seen pretty consistent conditions for our customers and just broadly around the macro I mean, we're seeing that same consistency around the globe, you know everyones experiencing pretty similar interest rate conditions.

Bill: And we're seeing that same consistency around the globe. Everyone's experiencing pretty similar interest rate conditions. A lot of marketers are operating with flat or frozen budgets. And so, you know, well, we've been really happy with our execution through the environment. You know, we obviously highlighted the new business growth. We've been really happy with the diversification of new customers that are coming in. I also do think that, you know, we've got some gas in the tank from the perspective of a lot of the product expansion that's happened a lot, you know, the what's that launch.

Lot of marketers are operating with flat or frozen budgets, and so you know well, where we've been really happy with our execution through the environment. We obviously highlighted the new business growth, we've been really happy with the diversification of new customers that are coming in I also do think that we've got some gas in the tank from the perspective of a lot of the product expansion that's happened a lot.

Bill: We've been happy with attraction there, but in an environment where marketers in general are sitting on frozen budgets, a lot of scrutiny from procurement, a lot of scrutiny from their CFOs. You know, the opportunity for a new product launch like that or expansion to continue to really see its full potential is going to be more limited. And so, you know, we're from the beginning of the year, we've seen things continue to be challenging and unpredictable.

The Whatsapp launch we've been happy with the traction there, but in an environment, where marketers in general are sitting on frozen budgets a lot of scrutiny from procurement at a lot of scrutiny from their CFO .

The opportunity for a new product launch like that or expansion to continue to really see its full potential is going to be more limited and so were.

From the beginning of the year, we've seen things continue to be challenging and unpredictable I'd say that conditions broadly haven't improved but they also haven't gotten worse and we've been really happy with the execution that we've seen across the company and we've strengthened a lot of the foundations both in our products as well as in our go to market strategy and our sales organization and we've been really focused for setting up the organization.

Bill: I'd say that conditions broadly haven't improved, but they also haven't gotten worse and we've been really happy with the execution that we've seen across the company. We've strengthened a lot of the foundations, both in our product as well as in our go-to-market strategy and our sales organization. And we've been really focused for setting up the organizations for our path to ability and error, but it is definitely still challenging out there. Appreciate the color.

For our path to 1 billion and there are but it is definitely still challenging out there.

Speaker 4: Appreciate the color. And then for Isabelle, good to see the continued improvement in gross margin. What were some of the drivers of the gross margin improvement in the quarter? And do you think you can continue to see step-ups in this metric as your customers will be going to utilize more large legartonal chip buildings? Thanks.

I appreciate the color.

Isabelle: And for Isabelle, good to see the continued improvement in gross margin.

Isabelle good to see the continued improvement in gross margin over there some of the drivers of the gross margin improvement in the quarter and do you think you can continue to see step ups in this metric as your customers begin to utilize more of a large liquid metal capabilities. Thanks.

Isabelle: What were some of the drivers of the gross margin improvement in the quarter? And do you think you can continue to see step ups in this metric as your customers begin to utilize more large language funnel capabilities? Thanks. Yeah, thanks for the question. Yes, I think the trajectory that we're on within our gross margin metric is very consistent with our long-term targets that we've stated. So our long-term targets is 67 to 72%.

Speaker 2: Yeah, thanks for the question. Yes, I think the trajectory that we're on in within our Gross Margin metric is very consistent with our long-term targets that we've stated. So our long-term targets is 67 to 72%. We're operating well within that range and already at 70%, which is great to see. And we're really kind of just picking up as we continue to experience and realize cost efficiencies and operations of scale across our technology stack and then some personnel efficiencies that we have. I think some of the ongoing things that we can look to that I've talked about before in terms of our past profitability is ongoing economies of scale across the tech stack, which we will continue to leverage and continue to improve over time. And then specifically across personnel, we've talked about our leveraging cost-optimized locations as we continue to grow that headcount finding ways to do so in a more optimized fashion. So I think the combination of those two things will continue to kind of

Thanks for the question, Yes, I think the trajectory that we're on and within our gross margin metric is very consistent with our long term targets that we've stated so our long term targets is 67% to 72% were operating well within that range in and already at 70%, which is great to see and we're really kind of just picking up as we continue to.

Isabelle: We're operating well within that range and already at 70%, which is great to see. And we're really kind of just picking up as we continue to experience and realize cost efficiencies and operations of scale across our technology stack. And then some personnel efficiencies that we have. I think some of the ongoing things that we can look to that I've talked about before in terms of our past profitability is ongoing economies of scale across the tech stack, which we will continue to leverage and continue to improve over time.

<unk> experience and realize.

Cost efficiencies and operations of scale across our technology stack and then some personnel efficiencies that we have I think some of the ongoing things that we can look to that I've talked about before in terms of our path to profitability is our ongoing and economies of scale across the tech stack, which we will continue to to leverage and continue to improve over time.

Isabelle: And then specifically across personnel, we've talked about our leveraging cost-optimized locations as we continue to grow that headcount, finding ways to do so in a more optimized fashion. So I think the combination of those two things will continue to kind of lead us to where we are and and beyond within that range that we've stated for the long-term. Appreciate the color.

And then specifically across personnel, we've talked about are leveraging cost optimized locations.

As we continue to grow that head count finding ways to do so in a more optimized fashion. So I think the combination of those two things will continue to kind of lead us to where we are in and beyond but within that range that we have stated for the long term.

Operator: Thank you.

Speaker 2: lead us to where we are and and beyond within that range that we've stated for the long term.

Appreciate the color. Thank you.

Jake Patelman: Our next question comes from Jake Patelman with Goldman Sachs. Jake, please unmute yourself and ask your question. Thanks for taking the question and congrats on on a great quarter. Bill, you mentioned an AI recommendation engine that will be a separate skew. Can you talk a little bit more about that? What the plans are to monetize it? And maybe are there some other AI skews that are coming down the pipe that you also charge for separately?

Speaker 3: Next question comes from Jake. Titleman with Goldman Sachs. Jake, please unmute yourself and ask your question.

Our next question comes from Jay <unk> with Goldman Sachs. Please on mute yourself and ask your question.

Speaker 1: Thanks for taking the question and congrats on a great quarter. Bill, you mentioned an AI recommendation engine that will be a separate skew. Can you talk a little bit more about that? What the plans are to monetize it? And maybe are there some other AI skews that are coming down the pipe that you also charge for separately?

Thanks for taking the question and congrats on a great quarter Bill you mentioned, an AI recommendation engine that will be a separate SKU can you talk a little bit more about that what the plans are to monetize it and maybe are there. Some other AI skus that are coming down the pipe that you also charge for separately.

Jake Patelman: Yeah, so across our AI and machine learning investments, we expect there to continue to be a mix of ways that we will realize returns on it. Some parts will be monetized independently. Our predictive suite has actually been in the product as a separate skew for a while. And if you look at the transformer driven recommendation engine, we anticipate that to both be a separate skew and also to support additional upsells for another product we have called product catalogs which could be used with or without the recommendation engine.

Yes, so across our AI and machine learning investments, we expect there to continue to be a mix of ways that we will realize returns on it some parts will be monetized independently are predictive suite has actually been in the product as a separate SKU for a while and if you look at the transformer driven recommendation engine, we anticipate that to both be a separate SKU and also to some.

<unk> additional upsells for another product, we have called product catalogs, which could be used with or without the recommendation engine and so those are both great. Examples of places where we have independent monetization and then we also have support of other aspects of the product that independently monetize in addition to that I think that a lot of the generative AI a lot of the generative AI investments that we're making which.

Jake Patelman: And so those are both great examples of places where we have independent monetization and then we also have support of other aspects of the product that independently monetized. In addition to that, you know, I think that a lot of the generative AI investments that we're making which are improving marketer productivity and allowing for marketers to just bring their ideas to life more quickly to be able to inspire them more. In the example of the SQL segment extensions or the data transformers that I spoke about earlier, we think that these are really good places where the generative AI is actually helping build confidence for marketers to take on more technical tasks within the platform.

Improving marketer productivity and allowing for marketers to just bring their ideas to life more quickly to be able to inspire them more in the example of the sequel segment extensions or the data Transformers that I spoke about earlier, we think that these are really good places where the generative AI is actually helping build confidence for marketers to.

To take on more technical tasks within the platform and what all of those lead to you is you know faster time to value more usage the confidence to deploy more use cases and of course, when we see new use cases come into the picture those usually come with more monthly active users and they often come with expansion into new channels or expansion into new data products.

Jake Patelman: And what all of those lead to is, you know, faster time to value more usage, the confidence to deploy more use cases. And of course, when we see new use cases come to the picture, those usually come with more monthly exit users and they often come with expansion into new channels or expansion into new data products. And so they're all very much self reinforcing, even without independent monetization. And, you know, of course, across the board, when we make marketers more productive and when we make the teams that use braze more agile, it also leads to higher levels of experimentation, which compounds our why improves customer satisfaction and ultimately leads to better differentiation for braze.

So theyre all very much self reinforcing even without independent monetization and of course across the board when we make marketers more productive and when we make the teams that use brands more agile. It also leads to higher levels of experimentation, which compounds ROI improves customer satisfaction and ultimately leads to a better differentiation for brain and so are we we see this kind of fly.

Jake Patelman: And so we see this kind of flywheel effects happening where, yes, we are absolutely going to independently monetize, but even if we weren't, we still think there's a lot of monetary benefit. And the ability for our community to continue to up level themselves more quickly so that braze can further separate from our competition. In the sense that we are certainly characterized in the market as being the top of the specification pyramid in the space.

We all effects happening, where yes, we are absolutely going to independently monetize but even if we werent. We still think there's a lot of monetary benefit and the ability for our community to continue up level themselves more quickly. So that <unk> can further separate from our competition in the sense that we are certainly characterized in the market as being the top of the sophistication.

Pyramid in the space and so the more that we have marketers who are operating with agile team methodologies and who are comfortable with more kind of data driven strategies as well as using more technical features all of those things lead to them being able to utilize the parts of <unk> that are very differentiated and very hard to mimic or copy and that leads to.

Jake Patelman: And so the more that we have marketers who are operating with agile team methodologies and who are comfortable with more kind of data driven strategies as well as using more technical features. All of those things lead to them being able to utilize the parts of braze that are very differentiated and very hard to mimic or copy. And that leads to pricing power and other sorts of benefits for us. Thank you. That was very helpful.

Pricing power and other sorts of benefits for us.

Speaker 1: Thank you, that was very helpful. And then I just wanted to follow up on the GSI being instrumental in one of your displacements of the legacy marketing clouds. Can you just talk a little bit about the GSI relationships, the global agency relationships, how those are evolving? And when do you think that that could actually be a material driver to revenue growth?

Thank you that was very helpful. And then I just wanted to follow up on the the the GSI being instrumental in one of your displacements of the legacy marketing clouds can you just talk a little bit about the.

Bill: And then I just wanted to follow up on the GSI being instrumental in one of your displacements of the legacy marketing clubs. Can you just talk a little bit about the GSI relationships, the global agency relationships, how those are evolving? And when do you think that that could actually be a material driver to revenue growth? Yes, we're continuing to deepen our relationships with solutions providers, including global systems integrators, the big agency holding companies, and also a vast global network of smaller marketing and growth agencies.

The the GSI relationships the global agency relationships, how those are evolving and when do you think that that could actually be a material driver to revenue growth.

Yes, we're continuing to deepen our relationships with solutions providers, including global systems integrators, The Big agency holding companies and also a vast global network of smaller marketing and growth agencies and the fundamentals of those relationships continue to be really solid we're investing to allow that mutually beneficial flywheel that I've spoken about in prior quarters to continue to spin up and.

Bill: And the fundamentals of those relationships continue to be really solid. We're investing to allow that mutually beneficial flywheel that I've spoken about in prior quarters to continue to spin up. And I'd say we're also advancing at varying speeds, depending on the partner, but we're really excited about the overall trend line. And we're seeing examples of tremendous success. We're generating really strong services revenue for those partners that are leaned into their brace practices and are going to market motions.

I'd say, we're also advancing at varying speeds, depending on the partner, but we're really excited about the overall trend line and we're seeing examples of tremendous success, where we're generating really strong services revenue for those partners that are leaned into their <unk> practices and our joint go to market motions, but you know the characterization of how you are really great brace partner is very different from the way that you may have been.

Bill: But you know, the characterization of how you are really great brace partners is very different from the way that you may have been a great partner of the legacy marketing clouds. Grace represents easier integration faster time to value. But on the flip side, it also represents greater opportunities to compound ROI through experimentation through additional data analysis. And so the types of services that really resonate with the brace customer base are different from, you know, what the GSI is where maybe you used to providing for legacy marketing providers.

Great partner, the legacy marketing clouds raise represents easier integration and faster time to value.

But on the flip side. It also represents greater opportunities to compound ROI through experimentation through additional data analysis and so the types of services that really resonate with the <unk> customer base are different from what the GSI is where may be used to providing for legacy marketing cloud providers, they're better and they're exactly where.

Bill: They're better. And they're exactly where those partners are trying to be to evolve to because it represents more ongoing revenue as opposed to being predominantly the upfront integration oriented revenue. And so it's a, you know, it's definitely an evolution that our partners want to make, especially at the GSI level. It's one that we're supporting them in making. But, you know, as I mentioned, they're certainly progressing at different speeds, depending on how we need in those organizations are.

Those partners are trying to evolve to because it represents more ongoing revenue as opposed to being predominantly the upfront integration oriented revenue and so it's a it's definitely an evolution that our partners want to make especially at the GSI level. It's one that we're supporting them in making but as I mentioned, there certainly progressing at different speeds depending on.

On Halloween in those organizations are and we're looking forward to seeing the success that we are in all the places where partners are really leaned in where they've adapted their model to spread more evenly across that entire ecosystem over time, and we're investing internally to make sure that that's going to happen, so where we're seeing really promising.

Bill: And, you know, we're looking forward to seeing the success that we are in all the places where partners are really leaned in where they've adapted their model. We're going to be able to spread more evenly across that entire ecosystem over time. And we're investing internally to make sure that that's going to happen. So we're seeing, you know, really promising early results from the GSI's and from the big holding companies, we're seeing growing momentum quarter over quarter.

Early results from the GSI is in from the Big holding companies at work seen growing momentum quarter over quarter and like I said, we we have complete confidence that the foundations of how we get that flywheel spinning in a mutually beneficial way are completely sound and will continue to be and we're excited about where that's going.

Bill: And like I said, we have complete confidence with the foundations of how we get that flywheel spinning in a mutually beneficial way are, you know, completely sound and will continue to be and we're excited about where that's going.

Bill: Great. Thank you very much.

Speaker 1: Great, thank you very much.

Great. Thank you very much.

Speaker 3: Our next question comes from Michael Burd with Wells Fargo. Please unmute yourself and ask your question.

Michael Berg: Our next question comes from Michael Berg with Wells Fargo. Please unmute yourself and ask your question. Hi, I can grow up some before and things for taking my question. I just have a quick one on the cloud data and Justin progress. You have a number of announcements in and around that space. And with the strength you're seeing in the business, maybe you can help us understand how that's helping either drive expansion, thinking as adoption or just, you know, how you're thinking about the benefits of that.

Our next question comes from Michael Barrett with Wells Fargo. Please on mute yourself and ask your question.

Speaker 4: Hi, I can grab some of the poor and things for taking my question. I just have a quick one on the cloud data and Justin progress. You have a number of announcements in and around that space. And with the strength you're seeing in the business, maybe it can help us understand how that's helping either drive expansion, sticking us adoption or just, you know, how you're thinking about the benefits of that water. It certainly seems it can ease the adoption curve here. Thank you.

Hi, congrats on the quarter and thanks for taking my question I just have a quick one on the cloud data adjustment progress you have a number of announcements in and around that space and with the strength youre seeing in the business maybe can help us understand how that's helping either drive expansion stickiness adoption or higher.

Thinking about the benefits of that certainly seems it could ease the adoption curve here. Thank you yeah.

Michael Berg: It certainly seems it can ease the adoption curve here. Thank you. Yeah, I think that's exactly right. And, you know, broadly, we're focused on ensuring that our customers can get their data into braze quickly, easily, affordably, and that they can do so without an ongoing maintenance burden. And so when you think about, you know, whether you want to call it the total cost of ownership or just think about the characterization of how braze first deploys and then lives within a technology ecosystem.

Speaker 5: Yeah, I think that's exactly right. And broadly, we're focused on ensuring that our customers can get their data into braze quickly, easily, affordably, and that they can do so without an ongoing maintenance burden. And so when you think about

Yeah, I think that's exactly right and broadly you were focused on ensuring that our customers can get their data into braised quickly easily affordably and that they can do so without an ongoing maintenance burden and so when you think about whether you want to call. It. The total cost of ownership or just think about the characterization of how braised first deploys and then lives within the technology.

Michael Berg: What we're trying to do with things like cloud data and Justin is lower the activation energy to both get data flowing into braze in the first place, but also to add those incremental use cases over time. And so that ability to onboard a customer more quickly to have them get comfortable in the braze environment, their early use cases out the door, and then immediately be looking at new opportunities to say, hey, oh, I didn't anticipate that I might want to personalize with this particular bit of data.

What we're trying to do with things like cloud data ingestion is lower the activation energy to both get data flowing into <unk> in the first place, but also to add those incremental use cases over time, and so that ability to onboard a customer more quickly to have them get comfortable in the Braves environment get there early use cases out the door and then immediately be looking at new opportunities to say hey.

Oh, I didn't anticipate that I might want to personalize with this particular bit of data or my data science team has just completed these new machine learning models around propensity, scoring that would be really helpful to incorporate into my personalization strategies embrace or I have a new corporate kpis that I want to be able to measure that was not a conversion event that was in my initial integration, but it lives in my data.

Michael Berg: Or my data science team has just completed, you know, these new machine learning models around propensity scoring that would be really helpful to incorporate into my personalization strategies and braze, or I have a new corporate KPI that I want to be able to measure that was not a conversion event that was in my initial integration, but it lives in my data warehouse. You know, there's a lot of examples like these that that in the past a marketing team would have had to have gone to an engineering team or a data science team, you know, gotten into their next sprint cycle gone through all of the heavyweight machinery that, you know, goes into releases around new software and such and just leads to delays additional energy and investment required and often that's enough for them to get their progress locked up.

House, you know there's a lot of examples like these that that in the past our marketing team would have had to have gone to an engineering team or a data science team gotten into their next spring cycle gone through all of the heavyweight machinery that goes into releases around new software and such and just leads to delays additional energy and <unk>.

<unk> required and often that's enough for them to get their progress locked up and so we're really trying to do is put marketers and control their own destiny for a wider swath of the data that lives within their ecosystem.

Michael Berg: And so we're really trying to do is put marketers and control their own destiny for a wider sloth of the data that lives within their ecosystem. You know, we're committed to giving customers flexible options for our stream processor to ingest either their raw data, the insights that they're generating through additional data science work and obviously all of the events and other activities that are generated by end user actions. And that means that we're committed to continuing to integrate with our whole partner ecosystem, working with CDPs, with diverse ETL vendors, with various analytics software, as well as the data warehouses and like houses and our own customers, the folk data engineering pipeline, so you should expect to continue to see a broad investment by braze on the data front so that the braze data platform continues to allow our customers to, you know, both get up and running more quickly get more use cases to us.

We're committed to giving customers flexible options for our stream processor to ingest either their raw data the insights that theyre generating through additional data science work and obviously all of the events and other activities that are generated by end user actions and that means that we're committed to continuing to integrate with our whole partner ecosystem working with CDP is with reverse E T. L. A N.

<unk> with various analytics software as well as the data warehouses and lake houses and our own customers bespoke data engineering pipeline. So you should expect to continue to see a broad investment by <unk> on the data front. So that the Braves data platform continues to allow our customers to both get up and running more quickly get more use cases to us and we're not.

Michael Berg: And we're not trying to monetize things like that independently because of course we have the great advantage of new data that flows into braze drives more use cases. It leads to incremental monthly active users when people bring in new user populations and it leads to additional messaging usage as people start to deploy braze into more and more parts of their user journey. And so, you know, we really look at data as an input, we want to make sure that customers can, you know, get it into braze very easily, they can expand that over time and it's all a really good self reinforcing loop. Thank you, very helpful.

Ryan to monetize things like that independently because of course, we have the great advantage of new data that flows into braised drives more use cases, it leads to incremental monthly active users when people bring in new user populations and it leads to additional messaging usage as people start to deploy brazen to more and more parts of their user journey.

So we really look at data as an input we want to make sure that our customers can get it into Braves very easily they can expand that over time and it's all a really good self reinforcing loop for us.

Speaker 4: Thank you very helpful. And I could follow up on the product front. Generative AI, you mentioned you are early to the game. When I think about your data, we built platform. It certainly seems like the products are coming out at a pretty high velocity. Is there anything structural in either your architecture or how you're using generative AI? That's helping with your R&D velocity. And you feel that's a competitive advantage moving forward to help take further share from the legacy players. Thank you.

Thank you very helpful. And then a quick follow up on the product front. Jeremy I. You had mentioned you were early to the game when I think about your natively built platform. It certainly seems like the products are coming out at a pretty high velocity is there anything structural in either your architecture, how youre using generative AI, that's helping with your R&D velocity.

Bill: And I could follow up on the product front. Generally, I, you mentioned, you are early to the game. When I think about your data, we built platform. It certainly seems like the products are coming out at a pretty high velocity. Is there anything structural in either your architecture or how you're using generative AI? That's helping with your R&D velocity, and you feel that's a competitive advantage moving forward to help take further share from the legacy players.

And that's a competitive advantage moving forward to help take further share from legacy players. Thank you.

Speaker 5: Yeah, absolutely. I mean, especially when comparing to the legacy players, many of which were assembled through a series of acquisitions and still maintain the siloed architectures that come as a result of that. I think Braze has always been super focused on keeping tight vertical integration through all the different layers of our stack, as well as just keeping complexity under control, making sure that we're constantly upgrading our foundations that we're keeping tech that under control. You know, a lot of the things that keep a well-honed and engineering machine running at high velocity, even as you continue to scale. And so when we're, you know, when we look at the roadmap velocity, we've been really happy with it for years. We've continued to add more and more investment to our R&D teams. And, you know, unlike in a lot of companies, as they get to a certain scale, you start to see the unit productivity slow down out of R&D. I actually feel like in many ways because of the strengthening of the foundations of Braze, we've sped up our unit productivity over the last few years. And you're seeing the results of that as you see not only the rapid injection of AI and more and more of our platform, but you're also seeing channel expansion, platform expansion, the Braze Data Platform continuing to, you know, deepen its capabilities. And as we think about, you know, where the future of customer engagement is going, what we're trying to do is make sure that we're supporting exactly where the leading edge of modern customer engagement teams are driving towards. They're becoming responsible for more and more of the customer journey. They're becoming responsible for not just the delivery of marketing messages, but also aspects of the product experience. And those are all, you know, those are all the leading edge of where we think that you can bring in a lot of these ideas around how are we data driven about what we're delivering? How do we use agility and experimentation to compound learnings over time? How do we make sure that, you know, we're delivering personalized relevant experiences?

Bill: Thank you. Yeah, absolutely. I mean, especially when comparing to the legacy players, many of which were assembled through a series of acquisitions and still maintain the siloed architectures that come as a result of that, you know, I think Braze has always been super focused on keeping a tight vertical integration through all the different layers of our stack as well as just keeping complexity under control, making sure that we're constantly upgrading our foundations that we're keeping tech that under control.

Yeah, absolutely I mean, especially when comparing to the legacy players many of which were assembled through a series of acquisitions and still maintain the siloed architectures that come as a result of that you know I think braised has always been super focused on keeping a tight vertical integration through all the different layers of our stack as well as.

Just keeping complexity under control, making sure that we're constantly upgrading our foundations that were keeping that under control you know a lot of the things that keep a well honed engineering machine running at high velocity, even as you continue to scale and so when we're when we look at the roadmap velocity, we've been really happy with it for years, we've continued to add more and more investment to our R&D team.

Bill: You know, a lot of the things that keep a well-honed and engineering machine running at high velocity even as you continue to scale. And so when we're, you know, when we look at the roadmap velocity, we've been really happy with it for years. We've continued to add more and more investment to our R&D teams and, you know, unlike in a lot of companies as they get to a certain scale, you start to see the unit productivity slowdown out of R&D.

And you know unlike in a lot of companies as they get to a certain scale you start to see the unit productivity slowdown out of R&D I actually feel like in many ways because of the strengthening of the foundations of raise we've sped up our unit productivity over the last few years and you're seeing the results of that as you see not only the rapid ingestion the rapid injection of AI into more and more of our platform.

Bill: I actually feel like in many ways because of the strengthening of the foundations of Braze, we sped up our, you know, productivity over the last few years, and you're seeing the results of that as you see not only the rapid ingestion, the rapid injection of AI into more and more of our platform, but you're also seeing channel expansion, platform expansion the Braze data platform continuing to, you know, deepen its capabilities. And as we think about, you know, where the future of customer engagement is going, what we're trying to do is make sure that we're supporting exactly where the leading edge of modern customer engagement teams are driving towards.

But you're also seeing channel expansion and platform expansion and the <unk> data platform continuing to deepen its capabilities and as we think about where the future of customer engagement is going what we're trying to do is make sure that we're supporting exactly where the leading edge of modern customer engagement teams are driving towards theyre, becoming responsible for more than.

Bill: They're becoming responsible for more and more of the customer journey. They're becoming responsible for not just the delivery of marketing messages, but also aspects of the product experience. And those are all, those are all the leading edge of where we think that you can bring in a lot of these ideas. How do we data driven about what we're delivering? How do we use agility and experimentation to compound learnings over time? How do we make sure that, you know, we're delivering personalized relevant experiences, we can take in the combination of all the context around the customer, all of the strategies and the important priorities for our business, and we combine those with automated decision making throughout the investment today, IML, and, you know, those things compound together to create a tremendous amount of value for the brands that use Braze.

More of the customer journey, they're becoming responsible for not just the delivery of marketing messages, but also aspects of the product experience and those are all those are all the leading edge of where we think that you can bring in a lot of these ideas around how are we data driven about what we're delivering how do we use agility and experimentation to compound learnings over time, how do we make sure that.

We're delivering personalized and relevant experiences when we can take in the combination of all the context around the customer all of the strategies and the important priorities for our business and we combine those with automated decision, making through all of the investments in AI and ml and you know those things compound together to create a tremendous amount of value for the brands that use sprays. They also deliver better product.

Bill: They also deliver better product experiences to, and you know, these are customers. And so, you know, we've always looked at the importance of us controlling that, you know, that end and data flow. And when you think about Braze's vertical integration, where we live inside the end user product, as users take actions, we know about it immediately, we're able to respond to it in the moment in the product, or we're able to use those insights in order to inform subsequent actions.

<unk> to end user customers and so we've always looked at the importance of us controlling that.

End to end data flow and when you think about raises vertical integration, where we live inside the end user products as users take actions, we know about it immediately we're able to respond to it in the moment in the product or we're able to use those insights to inform subsequent actions and marketers are able to actually stay focused on business.

Speaker 5: As users take actions, we know about it immediately. We're able to respond to it in the moment in the product or we're able to use those insights in order to inform subsequent actions. And marketers are able to actually stay focused on business strategy as opposed to thinking about channels. And so that's all inherent to our architecture. It's been there from the very beginning and you're seeing the benefits of that, not just in our great growth as a company, but also in our own.

Bill: And, you know, marketers are able to actually stay focused on business strategy, as opposed to thinking about channels. And so that's all inherent to our architecture. It's been there from the very beginning, and you're seeing the benefits of that, not just in, you know, our great growth as a company, but also in our R&D velocity.

Strategy as opposed to thinking about channels and so that's all inherent to our architecture. It's been there from the very beginning and Youre seeing the benefits of that not just in our great growth as a company, but also in our R&D velocity.

Speaker 3: Our next question comes from DJ Heinz with Canacorn. Please unmute yourself and ask your question.

DJ Heinz: Next question comes from DJ Heinz with Panacorn. Please unmute yourself and ask your question. Hey, guys, thanks for taking the question. I'll echo others comments on the photo. It was nice to see this a bunch of growth in PRPO is about the last time we spoke. I think the message from you is kind of like signs of stability are forming in the business.

Our next question comes from David Hynes.

With Canaccord.

I mean, it was now can ask your question.

Speaker 5: Hey guys, thanks for taking the question of, I'll echo others comments on the photo. It was nice to see this a bunch of growth in PRPO. Is about the last time we spoke, I think the message from you was kind of like signs of stability are forming in the business. Like to that end, can you talk at all about linearity of bookings in the quarter, any observations on kind of inter-quarter NRR? Any of that sort of stuff would be interesting to hear.

Hey, guys. Thanks for taking the question I'll Echo others' comments on the quarter. It was nice to see this a bunch of growth in <unk>.

It's about the lesson we spoke I think the message from you is kind of like signs of stability are forming in the business like to that end can you can you talk at all about linearity of bookings in the quarter any observations on kind of intra quarter NRI and any of that sort of stuff would be interesting to hear.

Bill: Like to that, and can you, can you talk at all about linearity of bookings in the quarter, any observations on kind of intro quarter NRR and any of that sort of stuff would be interesting to hear. Yeah, so I think we're really pleased with the execution that we have this quarter, and linearity actually, I think one quarter does not a pattern make, but we were very pleased with our linearity results. And in fact, if you look at some of the over attainment that we had relative to kind of the consensus number that was out there, linearity played a non negligible part of that.

Speaker 2: Yeah, so I think we're really pleased with the execution that we have this quarter. And linearity actually, I think one quarter does not a pattern make, but we were very pleased with our linearity results. And in fact, if you look at some of the over attainment that we had relative to kind of a consensus number that was out there, linearity played a non-negligible part of that. We are not including that type of expectation going forward for purposes of guidance. So definitely expect that to, you know, the overperformance that you're seeing here, this is not a pattern that we would expect to...

Yeah. So I think we're you know we're really pleased with the execution that we had this quarter.

And and linearity actually I think one quarter does not a pattern make them, but we were very pleased with our linearity results and in fact, if you look at sort of some of the over at attainment that we had relative to kind of a consensus number that was out there linearity played a non negligible part of that and I, we are not including.

Speaker 2: are a linearity result. And in fact, if you look at some of the over attainment that we had relative to kind of a consensus number that was out there, linearity played a non-negligible part of that. We are not including that type of expectation going forward for purposes of guidance. So definitely expect that to, you know, the overperformance that you're seeing here, this is not a pattern that we would expect to repeat. But it was very pleasing to us to see the linearity that we did achieve in this quarter.

Bill: We are not including that type of expectation going forward for purposes of guidance. So definitely expect that to, you know, the over performance that you're seeing here, this is not a pattern that we would expect to repeat, but it was very pleasing to us to see the linearity that we did achieve in this quarter. We're kind of back to the pattern of in this quarter, back to the pattern of about 50% of our bookings occurring in the first two months of the quarter, which is great versus some of the back end waiting that we had been experiencing over the past several quarters.

That type of expectation going forward for purposes of guidance. So definitely expect that to you know the over performance that you're seeing here. This is not a pattern that we would expect it to repeat but it was very pleasing to us to see the the linearity that we did achieve in this quarter, what kind of back to the pattern of our in this quarter of <unk>.

Speaker 2: But it was very pleasing to us to see the linearity that we did achieve in this quarter. We're kind of back to the pattern of, in this quarter, back to the pattern of about 50% of our bookings occurring in the first two months of the quarter, which is great versus some of the back end waiting that we had been experiencing over the past several quarter.

The pattern of about 50% of our bookings occurring in the first two months of the quarter, which is great versus some of the backend weighting that we have been experiencing over the past several quarters.

Isabelle: And then a quick follow up for you is that what's that channel kind of gets into market and continues to scale and any comments we make around kind of contribution margin of that channel. Like, does it look more like SMS? Does it look more like higher margin channels? How should we think about things? Yeah, so we won't, we won't speak specifically to that. I'll just sort of, and I think we've made comments around this just sort of in terms of like where it lives in the sequence.

Speaker 5: And then a quick follow up for you is that what's that channel kind of gets into market and continues to scale any any comments we'd make around. Kind of contribution margin of that channel like does it look more like SMS is it look more like higher margin channels, I should we think about things.

And then a quick follow up for you is that Whatsapp channel kind of gets into market and continues to scale any any comments you would make around.

Contribution margin of that channel like does it look more like US I'm asked is it look more like higher margin channels, how should we think about things. Yeah. So we don't we don't speak specifically to that I'll, just sort of and I think we've made comments around this just sort of in terms of like where it lives in the sequence.

Speaker 2: Yeah, so we won't speak specifically to that. I'll just sort of, and I think we've made comments around this just sort of in terms of like where it lives in the sequence. It's going to be somewhere between email and SMS. So think of it as kind of there in the, in the pecking order. But that's, that's what I'll say. I'm not concerned, certainly not concerned. In fact, even as SMS was growing as a proportion of our total top line, which it's done very steadily over the last three and a half, four years, we've continued to find ways to expand our margin and you've seen that fairly meaningfully. So I would not look at the incorporation or growth of WhatsApp as with any concern towards gross margin.

Isabelle: It's going to be somewhere between email and SMS. So think of it as kind of there in the, in the pecking order, but that's that's what I'll say. I'm not concerned, certainly not concerned, you know, in fact, even as SMS was growing as a proportion of our total top line, which it's done very steadily over the last three and a half four years. We've continued to find ways to expand our margin and you've seen that fairly meaningfully. So I would not look at the incorporation or growth of what's happened with any concern towards gross margin compression. Yeah, it makes sense, very helpful.

It's going to be somewhere between email and ethanol so think of it as kind of there in the in the pecking order them, but.

That said, that's what I'll say I'm not concerned certainly not concerned you know in fact, even as SMS was growing as a proportion of our total topline, which it's done very steadily over the last three and a half four years, we've continued to find ways to expand our margin and you've seen that fairly meaningfully. So I would not look at the incorporation or growth of Whatsapp is with.

Any concern towards gross margin compression.

Speaker 5: Yep, it makes sense. Very helpful. Thank you guys. Congrats.

Yeah that makes sense very helpful. Thank you guys congrats.

Operator: Thank you guys, congrats.

Speaker 3: My next question comes from Derek Wood with Cohen. Please unmute yourself and ask your question.

Derek Wood: Our next question comes from Derek Wood with Cohen. Please unmute yourself and ask your question. Oh, great.

Our next question comes from Derrick Wood with Cowen.

Ask your question.

Speaker 5: Oh great thanks congrats on a solid quarter. Following on that same topic just curious Bill or as well but what you're seeing in terms of cross-hell activity across channels including email SMS and app WhatsApp just wondering outside of push where you're seeing the most traction and whether there's any change in what channels you're landing with for Newcastle.

Oh, great. Thanks, Congrats on a solid quarter following on that same topic just curious.

Bill: Thanks, congrats on a solid quarter. Following on that same topic, just curious, Bill, or as well, what, what you're seeing in terms of cross-cell activity across channels, including email, SMS, an app, what's app, just wondering outside of push, where you're seeing the most traction and whether there's any change in what channels you're landing with for new customers. Yeah, so I'll call it two things. You know, one is that we've been really excited to see that as we've added new channels and as we've grown the sophistication of the channels, even some that have been, you know, in the product for, you know, 10 years, like email, that we continue to find the ability to start new contracts across, you know, any subset of channels.

Pillar as well.

Are you seeing in terms of cross sell activity across channels, including email SMS and App Whatsapp, just wondering outside of push where youre seeing the most traction in and whether there is any change in what channels you are landing with for new customers.

Speaker 5: I'll call it two things. One is that we've been really excited to see that as we've added new channels and as we've grown the sophistication of the channels, even some that have been in the product for 10 years, like email, that we continue to find the ability to start new contracts across any subset of channels. So we have customers that are starting with just SMS, with just content cards, with just email, obviously just mobile, which is a big part of our heritage. And so as we continue to build out these new channels, we're looking for them to both provide upsell and cross-sell opportunities, but also a new way to introduce people into the Braze ecosystem. And our goal with all of these and this comes under that umbrella of start anywhere, go everywhere that we've been talking about for a while is that when we get a customer into Braze on any given channel, we introduce them to Ken.

Yes, I'll call. It two things one is that we've been really excited to see that as we've added new channels and as we've grown the sophistication of those channels, even some that have been in the product for 10 years like email that we continue to find the ability to start new contracts across you know any subset of channels. So we have customers.

Bill: So we have customers that are starting with just SMS with just content cards with just email, obviously, you know, just mobile, which is a big part of our heritage. And so as we continue to build out these new channels, we're looking for them to both provide upsell and cross-cell opportunities, but also a new way to introduce people into the braze ecosystem. And our goal with all of these, and this comes under that umbrella of start anywhere, go everywhere that we've been talking about for a while, is that when we get a customer into braze on any given channel, we introduce them to Canvas.

That are starting with just us amass with just content cars with just E mail them, obviously, just mobile which is a big part of our heritage and so as we continue to build out these new channels. We're looking for them to both provide upsell and cross sell opportunities, but also a new way to introduce people into the Braves ecosystem and our goal.

All with all of these and this comes under that umbrella of start anywhere go everywhere that we've been talking about for a while is that when we get a customer into braze on any given channel we introduced them to canvas and they also set up a data flow that flows through every layer of our stack and 11. They do that it's incrementally very easy for them to then expand across to you.

Speaker 5: And they also set up a data flow that flows through every layer of our stack. And once they do that, it's incrementally very easy for them to then expand across to other channels. The feature sets that they use for targeting and for personalization, the concepts that exist around reporting are all the same. In many cases, the data flow can be augmented. And I spoke earlier about how things like cloud data and JSON and a lot of our partnerships across the broader data, you go to some, make it easy for new use cases or new channels to have the data that backs them supplementarily come in and get set up quickly. And so we've got the right mechanisms both to have customers start in a flexible array of places, as well as have them continue to expand across new channels.

Bill: And they also set up a data flow that flows through every layer of our stack. And once they do that, it's incrementally very easy for them to then expand across to other channels. The feature sets that they use for targeting and for personalization, the concepts that exist around reporting are all the same in many cases, the data flow, you know, can be augmented. And I spoke earlier about how things like cloud data and jussian and a lot of our partnerships across the broader data ecosystem make it easy for new use cases or new channels to have the data that backs them supplementarily early come in and get set up quickly.

Other channels the feature sets that they use for targeting and for personalization. The concepts that exist around reporting are all the same in many cases the data flow.

Can be augmented and I spoke earlier about how things like cloud data ingestion and in a lot of our partnerships across the broader data ecosystem make it easy for new use cases or new channels to have the data that backs them supplemental early come in and get set up quickly and so we've got the right mechanisms both to have customers start and a flexible array of places as well.

Bill: And so we've got the right mechanisms both to have customers start in a flexible array of places as well as have them continue to expand across new channels. I'd say that the thing that's most exciting though is the sheer number of customers that we see go from four to five to six to seven to eight to nine, you know, channels. I was visiting a customer in Australia earlier this year who proudly told me that they were in 11 different braze channels.

As have them continue to expand across new channels I'd say the thing that's most exciting though is the sheer number of customers that we see go from four to five to six to seven to eight to nine channels I was visiting a customer in.

Speaker 5: I'd say that the thing that's most exciting though, is the sheer number of customers that we see go from four to five, to six to seven, to eight, to nine, you know, channels. I was visiting a customer in...

Australia earlier this year, who proudly told me that they were in 11 different race channels and they had made it like an internal mission to make sure that they continue to adopt all of them and you know when we look at the adoption of a whatsapp in the quarter. You know there were certainly some of the customers that came in there were brand new but there are other places where a customer was.

Bill: And they had made it like an internal mission to make sure that they continue to adopt all of them. And you know, when we looked at the adoption of what's happened in the quarter, you know, there were certainly some of the customers that came in there were brand new. But there are other places where a customer was adding in as their fifth six or seven channel. And I think that when you look out across the legacy marketing cloud landscape and if you look out across our, you know, the other startup competitors that we have, you're just not going to see examples of that.

And as their fifth sixth or seventh channel and I think that when you look out across the legacy marketing cloud landscape and if you look out across our you know the other start up competitors that we have you're just not going to see examples of that and it goes back to a lot of the points I was making about architecture earlier, which is that unless your laser focus on controlling complexity through the entire lie.

Bill: And it goes back to a lot of the points I was making about architecture earlier, which is that unless your laser focused on controlling complexity through the entire lifetime of your existence. And unless your R&D process is continuously focused on upgrading your foundations and maintaining tech that and making sure that, you know, you're doing a lot of user experience research that you're going back and revamping the, you know, UI UX of all of these different products as you introduce new channels.

Time of your existence and unless your R&D process is continuously focused on upgrading your foundations are maintaining check that and making sure that you're doing a lot of user experience research that you're going back and revamping. The UI UX of all of these different products as you introduce new channels, so that the complexity stays under control.

Bill: So that the complexity stays under control. You just are not capable of being able to have your customers expand so fluidly and across so many different channels as we see with braze. You know, I talk a lot here about how if we're, if we're talking about channels, we're actually missing the point, you know, the idea is that if we can get people into orchestration and into sophisticated data driven strategies that are focused on, you know, what the customer cares about and what the brand cares about.

You just are not capable of being able to have your customers expand so fluidly and across so many different channels as we see with brands.

<unk> talked a lot here about how if we're if we're talking about channels were actually missing. The point you know the idea is that if we can get people into orchestration and anticipated data driven strategies that are focused on what the customer cares about and what the brand cares about and how you marry those together and have them self reinforce each other through sophisticated customer engage.

Bill: And how you marry those together and have them self reinforced each other through, you know, sophisticated customer engagement that the channels are more of an implementation detail. And you're not achieving that unless your customers are able to spread across them. And so, you know, we really carry that as a goal, both with our product development, as well as how we help our customers through integration and onboarding. And through the post fails process as they add new channels, you know, over their years of being a braze customer and will continue to, you know, will continue to measure ourselves by by that yardstick to be able to say, hey, you know, it should be just as easy for a customer to adopt their eighth channel as it is for them to adopt their, you know, their first two.

I meant that the channels are more of an implementation detail and you're not achieving that in last year customers are able to spread across them and so we really carry that as a goal both with our product development as well as how we help our customers through integration and on boarding and through the post sales process as they add new channels, you know over their years of being a <unk> customer and we'll continue to you know will continue.

To measure ourselves by by that yardstick to be able to say hey, you know it should be just as easy for a customer to adopt their eighth channel as it is for them to adopt their you know their first two and as long as we can keep accomplishing that we think that our ability to invest in that new channels or to deepen the capabilities of existing channels and have our customers take advantage of those Ted.

Bill: And as long as we can keep accomplishing that, we think that our ability to invest in that new channels or to deepen the capabilities of existing channels and have our customers, you know, take advantage of those to both drive more revenue to braze. Through cross selling upsell, but also do enhance our own ROI will continue to be a really vibrant growth path for us.

Both drive more revenue to braze through cross selling upsell, but also to enhance our own ROI, we'll continue to be a really vibrant growth path for us.

Speaker 6: Great, thanks for that. Maybe one for Isabelle, just on the guidance. I mean, going into Q2, you had guided for seven percent sequential growth. You ended up with 13, very strong quarter. Going into Q3, you're guiding for two percent growth.

Isabelle: Braze, thanks for that, maybe one for Isabelle, just on the guidance. I mean, going into Q2, you had guided for 7% sequential growth, you entered up with 13, very strong quarter. Going into Q3, you're guiding for 2% growth.

Great. Thanks for that and maybe one for Isabelle just on the guidance I mean going into Q2, you had guided for 7% sequential growth you ended up with 13 very strong quarter.

Going into Q3, you're guiding for 2% growth.

Speaker 6: It shafts like maybe that upside and Q2 is linearity and you're not assuming that and Q3, but anything else to call out in terms of potential, maybe some pull forward or how to think about some, you know, extra seasonality around the Q3.

Isabelle: It shafts like maybe that upside, and Q2 is linearity, and you're not assuming that, and Q3, but anything else to call out in terms of potential, maybe some pole forward, or I think about some extra seasonality around the Q3. Yeah, thanks for the question. I think one other thing to call out to the linearity is certainly at play, and we did have a very strong execution quarter. I think one quarter does not have had her make, so the combination of the strong execution with the linearity, those two things combined drove some higher than anticipated results, which I wouldn't necessarily expect to repeat, and are not embedded in the guide in the back half of the year.

It sounds like maybe that upside in Q2 was linearity and youre not assuming that in Q.

Q3, but anything else to call call out in terms of potential maybe some pull forward or how to think about some extra seasonality around the around the Q3.

Speaker 2: Yeah, thanks for the question. I think one other thing to call out to the linearity is certainly at play. And we did have a very strong execution quarter. I think one quarter does not have had her make. So the combination of the strong execution with the linearity, those two things combined, drove some higher than anticipated result.

Yeah. Thanks for the question and I think one other thing to call out so that the linearity is certainly at play and we did have a very strong execution quarter or I think one quarter does not a pattern makes so the combination of the strong execution with the linearity of those two things combined drove some higher than anticipated.

Speaker 2: which I wouldn't necessarily expect to repeat and are not embedded in the guide in the back half of the year. The other item is you'll remember in my comments that North Star was in terms of the guide we had embedded about a million dollars.

Else, which I wouldn't necessarily expected to repeat in or not in embedded in the guide in the back half of the year. The other item is you'll remember in my comments that North Star was a in terms of the guide we had embedded about $1 million and we had an extremely successful on time integration right at the beginning of.

Isabelle: The other item is, you'll remember in my comments that North Star was, in terms of the guide, we had embedded about a million dollars, and we had an extremely successful on-time integration right at the beginning of June, for that, had very limited surprises to downside, and they contributed almost 2 million instead of that one. So when you combine that factor with the strong ACB and the linearity, all of that combined together, that drives kind of the level of outperformance that you saw. We are continuing, you heard Bill talk about the where we are on the macro, we're not anticipating that to improve, and therefore we're continuing to have a risk-adjusted posture in our in our in our guidance.

Speaker 2: And we had an extremely successful on-time integration, right at the beginning of June , for that had very limited surprises to downside and they contributed almost 2 million instead of that one. So when you combine that factor with the strong ACV and the linearity, all of that combined together, that drives kind of the level of outperformance that you saw. We are continuing, you heard Bill talk about the where we are on the macro, we're not anticipating that to improve.

June four four that had very limited surprises to the downside and they contributed almost 2 million instead of that one so when you combine that factor with the strong ACD and the linearity all of that combined together that drives kind of the level of outperformance that you saw we are continuing to her they'll talk about the where we are in the macro we're not.

Not anticipating that to improve.

Speaker 2: And therefore we're continuing to have a risk adjusted posture in our in our in our guidance.

And therefore, where we're continuing to have a risk adjusted posture in our in our earnings and our guidance.

Isabelle: Very clear, very clear. Thank you. Oh, the only other thing to mention, sorry, the only other official basis, remember that Q1 to Q2 has the number of day counts that changes, so Q1 only has 89 days. All the other quarters have 92, and so from a sequential perspective, you end up with the very strong sequential growth between Q1 and Q2. That does not repeat in any other quarter. Got it, thank you.

Very clear very clear thank you.

Speaker 2: Oh, the only other thing to mention is on a sequential basis. Remember that Q1 to Q2 has the number of day count that changes. So Q1 only has 89 days. All the other quarters have 92. And so from a sequential perspective, you end up with the very strong sequential growth between Q1 and Q2. That does not repeat in any other quarter.

Oh, the only other thing to mention sorry, the only other thing to mention is on a sequential basis remember that Q1 to Q2 has that number of day count. The changes. So Q1 only has an 89 days all the other quarters have 92 and sell from a sequential perspective, you end up with a very strong sequential.

Growth between Q1, and Q2 that does not repeat in any other quarter.

Got it thank you.

Speaker 3: Our next question comes from Arjan, Badiay with William Blair. Please unmute yourself and ask your question.

Arjan Bhatia: Our next question comes from Arjan, Badiay with William Blair.

Our next question comes from Orange on body Yang with William Blair. Please limit yourself and ask your question.

Bill: Please unmute yourself and ask your question. Thanks for taking the question here. Bill, maybe one for you, it seems like ease of use, and you know, kind of know all paraphrases are like preconfigured data nothing. It's a big part of the investment that you're making. How much of a sticking factor, data factor, was that with with customers for growth, and as you make these investments, it is the goal to, you know, expand about our customer segment that you didn't have access to, maybe just increase the intensity with the customers and raise the data that they're considering the platform.

Speaker 7: Thanks for taking the question here. Bill maybe one for you seems like ease of use and you know kind of I'll paraphrase if they're like preconfigured data mapping is a big part of the investment that you're making How much of a sticking factor dating factor was that with with customers for Great and as you make these investment

Thanks for taking the question here Bill maybe one for you it seems like.

Neither view and kind of maybe.

Maybe I'll start first with Reconfiguring data mapping.

Part of the investments that youre, making how much of a sticking factor gating factor was that with with customers for growth as you make these investments.

Speaker 7: It is the goal to, you know, expand about our customer segment that we didn't have access to or maybe just increase the intensity with the customers and raise the data that they're considering the time phone.

Is the goal to.

And the other customer segments that we didn't have access to ore.

Maybe just increase the intensity.

Yes.

Well the data.

Bill: Yeah, so it's definitely both, but they, they really go hand in hand. If you take, for instance, consumables or CPG as an example, you know, many of those brands don't have large mobile app audiences. And so the historical way, which was very SDK centric that we got the vast majority of the data into braze, is not going to be as applicable to a lot of their use cases. But when you look at, you know, to take, to continue with that example, when you look at their paid ads, spend the combination of pulling, you know, the growing first party data sets that they're creating out of data warehouses through something like cloud data ingestion or using a partner, like a CDP or a VCPL provider into braze, and then being able to take action with things like our audience think capability, is not what you would think of as a traditional braze use case of integrating into a mobile app and sending push notifications, but it's actually tremendous ROI when you consider the per user orchestration of data as it's generated in order to direct marketing actions.

Speaker 5: Yeah, so it's definitely both, but they really go hand in hand. If you take, for instance, consumables or CPG as an example, you know, many of those brands don't have large mobile app audiences. And so the historical way, which was very SDK centric that we got the vast majority of the data into braze is not going to be as applicable to a lot of their use cases. But when you look at, you know, to take, to continue with that example, when you look at their paid ad spend, the combination of pulling, you know, the growing first party data sets that they're creating out of data warehouses through something like cloud data ingestion or using a partner, like a CDP or a VCPL provider into braze. And then being able to take action with things like our audience think capability is not what you would think of as a traditional braze use case of integrating into a mobile app and sending push notifications. But it's actually tremendous ROI when you consider the per user orchestration of data as it's generated in order to direct marketing actions. And so, you know, it's a combination of both us expanding into new verticals, in into new use cases, as well as the expansion of our own channel and platform breadth. So as braze has more places to interact with customers and more places to collect data, that enables us to execute on more use cases. Of course, Canvas has been architected the entire time to be incredibly flexible and to enable customers to be able to take action. And so, when you combine those things together, what you get is a greater amount of optionality for our customers to move within the surface area of our product.

Yeah. So it's definitely both but they are they really go hand in hand, if you take for instance, consumables our CPG as an example, many of those brands don't have large mobile app audiences and so the historical way, which was very SDK centric that we got the vast majority of the data into braze is.

I'm not going to be as applicable to a lot of their use cases, but when you look at to take to continue with that example, when you look at their paid AD spend the combination of polling.

Growing first party data sets that they're creating out of data warehouses through something like called data ingestion or using a partner like a CDP or a versus T. L provider Integrase, and then being able to take action with things like our audience and capability is not what you would think of as a traditional braise use case of integrating into a mobile app and sending push notifications, but it's.

Actually tremendous ROI when you consider the per user orchestration of data as it's generated in order to direct marketing actions and so you know it's it's.

Bill: And so, you know, it's a combination of both us expanding into new verticals, in into new use cases, as well as the expansion of our own channel and platform breadth. So as braze has more places to interact with customers and more places to collect data, that enables us to execute on more use cases. Of course, Canvas has been architected the entire time to be incredibly flexible and to enable customers to be able to take action across all of these different places.

It's a combination of bolt us expanding into new verticals and into new use cases, as well as the expansion of our own channel and platform breadth. So as braised has more places to interact with customers and more places to collect data that enables us to execute on more use cases of course canvas has been architected the.

Bill: And so, when you combine those things together, what you get is a greater amount of optionality for our customers to move within the surface area of our product, and in order to support their movement through that surface area, you need to be able to, you need to be able to make it easy for them to get new data into braze and into places where we're going to be able to make sense of it and take action on it quickly.

Entire time to be incredibly flexible and to enable customers to be able to take action across all of these different places and so when you combine those things together what you get is a greater amount of optionality for our customers to move within the surface area of our products and in order to support their movement through that surface area, you need to be able to.

Speaker 5: You need to be able to make it easy for them to get new data into into braze and into places where we're going to be able to make sense of it and take action on a quick

We need to be able to make it easy for them to get new data into it into <unk> and into places, where we're going to be able to make sense of it and take action on it quickly.

Isabelle: Ashley. God, it's super helpful. And for Isabelle, I know you have a pre-catchable break-even timeline out there, as we just kind of navigate through the next two quarters of, you know, continued macro. What would be some of those factors that maybe get you to push a poll that timeline and make any investments that you're making real money? Yeah, thanks for the question. So, are you asking specifically only on pre-catchable or the operating income as well?

Speaker 7: Got it super helpful. And for Isabel, I know you have a pre-catchable break in and timeline out there as we just kind of navigate through the next few quarters of, you know, continued macro. What would be some of those factors that maybe get you to push a poll that timeline and make a thing with lessons that you're making real good.

Got it.

Helpful and for Israel.

I know you have a free.

Free cash flow breakeven.

I'm out there.

We just kind of navigate through the next few quarters.

No continued macro what would be some of the factors that maybe get you to push a bowl.

That timeline.

At that point that you're making.

Speaker 2: Yeah, thanks for the question. So are you asking specifically only on pre-cashelo or the operating income as well?

Yeah. Thanks for the question. So are you asking specifically on the on free cash flow or the operating income as well, but they're I mean theres two different sets of anthem.

Speaker 2: But there's two different sets of answers. No, in general. In general. Yeah, okay. Yeah, got it. Okay, great. Yeah, so I'm going to reiterate some comments that we've been making as we've been talking about this patch of profitability. Don't expect us to overachieve on this because to the extent we generate extra capacity, we are going to look to prudently reinvest that into the business in order to foster overall growth.

Isabelle: But I'm going to, there's two different sets of answers. No, in general, in general. Yeah, okay. Yeah, got it. Okay, great. Yeah. So, I'm going to reiterate some comments that we've been making as we've been talking about this past profitability. Don't expect us to overachieve on this, because to the extent we generate extra capacity, we are going to look to prudently reinvest that into the business in order to foster overall growth.

In general in general.

Yeah.

Yeah got it okay, great yeah, so I'm going to reiterate some comments that we've been making as we've been talking about this path to profitability.

Don't expect us to overachieve on that because to the extent, we generate extra capacity, we are going to look to prudently reinvest that into the business in order to foster overall growth.

Isabelle: So, I think we're sticking to the timeline that we have articulated both for the free cash flow and the operating income. You know, we were very pleased with our performance this quarter, but actually we are taking some of the savings that we've realized on a year-to-date basis, and we are enabling certain parts of the business to redeploy some of those savings through the back half of the year, while maintaining laser focus on our guidance for Q4. So, so I, you know, short answer is don't expect us to overachieve and we have, we're consistent in that commentary. Okay, understood. Thank you. Appreciate you taking a question.

So I think we're sticking to the timeline that we have articulated both for the free cash flow and the operating income and you know we we were very pleased with our performance this quarter, but actually we are taking some of the savings that we've realized on a year to date basis, and we are enabling certain parts of the business to redeploy some of those.

Operator: For the purpose of time, and so we can get to everyone's question, please limit to one question.

Savings are through the back half of the year, while maintaining a laser focus on our guidance for Q4. So so yeah short answer is don't expect us to overachieve in and we have we're consistent in that commentary.

Speaker 2: guidance for Q4. So, you know, short answer is don't expect us to overachieve and we have, we're consistent in that commentary. Okay, understood. Thank you. Appreciate it. You're taking a question. So the purpose of time and so we can get to everyone's question, please limit to one question. Our next question comes from Nick Altman, Ms. Costa Bank. Please unmute yourself and ask your question. Awesome. Thanks, guys. Just a quick one for me. You know, as we entered the year, there's sort of.

Speaker 7: Okay, I understood. Thank you appreciate it. You're taking the question.

Okay understood. Thank you appreciate you taking the question.

Speaker 3: The purpose of time and so we can get to everyone's question, please limit to one question. Our next question comes from Nick Altman with scosa bank. Please unmute yourself and ask your question.

The purpose of time and so we can get to everyone's questions. Please limit to one question.

Nick Altmann: Our next question comes from Nick Altman, Ms. Costa Bank. Please unmute yourself and ask your question. Awesome. Thanks, guys. Just a quick one for me, you know, as we entered the year, there's sort of a notion that COVID perhaps had a little bit of front office pull forward and then the turbulent macro. You know, front office, smart tech initiatives, maybe get put on the back burner. Just given the booking strength in Q1 and Q2 here, is there any way to sort of parse out the strength between the end market, holding up a little bit better than maybe you guys had expected versus you guys just executing much better. Because I know that Isabelle, you would call out execution was very strong and QQ so just wondering if you could kind of parse out the strength between those two factors.

Our next question comes from Wisconsin Bank. Please on mute yourself and ask your question.

Speaker 8: Awesome. Thanks guys. Just a quick one for me. You know, as we entered the year, there's sort of a notion that COVID perhaps had a little bit of front office pull forward and then the turbulent macro, you know, front office, smart tech initiatives, maybe get put on the back burner. Just given the booking strength and Q1 and Q2 here, is there any way to sort of parse out the strength between

Awesome. Thanks, guys.

Quick one for me.

We entered the year there are sort of the notion that perhaps had a little bit of front office or in the turbulent macro.

Front office Mark initiatives, maybe get put on the backburner.

Just given the bookings strength in Q1 and two in Q2 here is there any way to sort of parse out the strength between the.

Speaker 8: the end market, holding up a little bit better than maybe you guys had expected versus you guys just executing much better. Because I know that Isabelle you would call about execution was very strong and cute. So just wondering if you could kind of parse out the strength of between those two factors. Thanks.

Market holding up a little bit better than maybe you guys had expected versus you guys just executing much better.

Now that is about you called out execution was very strong in Q2. So just wondering if you could kind of parse out the strength between those two factors.

Bill: Yeah, I mean, I said this at the top, which is that I think that the broad macro that we're experiencing and that everyone is experiencing together has been pretty consistent throughout the year so far. And so, you know, I, I've also been, you know, speaking for for quarters now on these calls about how, you know, we think that a lot of the narratives about out there about the front office about, you know, concepts like optimizing spend don't apply to customer engagement in the same way because the marginal ROI of customer engagement activities by customers is so much higher than a lot of other marketing spend.

Speaker 5: Yeah, I mean, I said this at the top, which is that I think that the broad macro that we're experiencing and that everyone is experiencing together has been pretty consistent throughout the year so far. And so, you know, I, I,

Yeah, I mean, I said this at the top which is that I think that the broad macro that we're experiencing and that everyone is experiencing together has been pretty consistent throughout the year, so far and so.

Speaker 5: I've also been speaking for quarters now on these calls about how we think that a lot of the narratives about there about the front office, about concepts like optimizing spend, don't apply to customer engagement in the same way because the marginal ROI of customer engagement activities by customers is so much higher than a lot of other marketing spend. We're not a feedback model. We're tied to the activity of the customers. And the fact that you also can't go through, a lot of the optimization strategies that companies have used for things like data warehouses or other sorts of analysis where you do things like sampling, just simply don't apply when you need to actually be able to talk to your customers. It's always on responsibility for brands. And so, I would present that in two ways. One is that we think we're seeing.

I I've also been speaking for per quarter on these calls about how we think that a lot of the narratives about out there about the front office about concepts like optimizing spend don't apply to customer engagement in the same way because the marginal ROI of customer engagement activities by customers.

So much higher than a lot of other marketing spend we're not a fee based model were tied to the activity of the customers and the and the fact that you also can't go through a lot of the optimization strategies that you know companies have used for things like data warehouses or other sorts of analysis, where you do things like sampling just simply don't apply when you need to actually be able to talk.

Bill: And, you know, we're not a feedback model. We're tied to the activity of the customers and, you know, the end, the fact that you also can't go through a lot of the optimization strategies that, you know, companies have used for things like data warehouses or other sorts of analysis where you do things like sampling just simply don't apply when you need to actually be able to talk to your customers right it's always on responsibility for brands and so, you know, I, I would present that in two ways, you know, one is that we think we're seeing.

To your customers right, it's always on responsibility for brands and so.

I would present that in two ways. One is that we think we're seeing.

Bill: We're seeing a pretty consistent buyer behavior throughout these periods, but I think also a lot of the front office narratives that have been floating around out there don't apply to customer engagement in the same way. And then, you know, just reiterate that we have been really happy with execution, you know, it was four quarters ago on this call that we highlighted, you know, some of the struggles that we were seeing from a sales source productivity perspective.

Speaker 5: a pretty consistent buyer behavior throughout these periods. But I think also a lot of the front office narratives that have been floating around out there don't apply to customer engagement in the same way. And then, you know, just reiterate that we have been really happy with execution. You know, it was four quarters ago on this call that we highlighted, you know, some of the struggles that we were seeing from a sales source productivity perspective. And in those last four quarters, we've done a tremendous amount of work on this topic, including org structure and leadership changes across both sales and go to market strategy. We, you know, enhanced our training and our in-person onboarding, tighter performance management. We also had a renewed focus on competitive strategy to make sure that in an environment with less opportunities that we're winning as many of them as we can. And we're encouraged by that progress. And we think we're going to continue to make progress there. You know, I think salesman, I was high and we're working really well together as a team. We're actually currently completing what is effectively a mid-year global sales kickoff complete with training workshops and role playing, all of which have been done in person. It's actually an example of some of these incremental investments that we're making. Right now, that Isabelle just alluded to.

A pretty consistent buyer behavior throughout these periods, but I think also a lot of the front office narratives that have been floating around out there don't apply to customer engagement in the same way and then I'll just reiterate that we have been really happy with execution. You know it was four quarters ago on this call that we highlighted some of the struggles that we were seeing from our sales force productivity.

Bill: And in those last four quarters we've done a tremendous amount of work on this topic, including our structure and leadership changes across both sales and go to market strategy. We, you know, enhanced our training and our in-person onboarding tighter performance management. We also had a renewed focus on competitive strategy to make sure that in an environment with less opportunities that we're winning as many of them as we can. And we're encouraged by that progress and we think we're going to continue to make progress there.

Perspective, and in those last four quarters, we've done a tremendous amount of work on this topic, including or structure and leadership changes are profitable across both sales and go to market strategy and we've enhanced our training and or in person Onboarding tighter performance management and we also had a renewed focus on competitive strategy to make sure that in an environment with less opportunities that we're winning as many of.

As we can and we're encouraged by that progress and we think we're going to continue to make progress. There I think sales morale is high and we're working really well together as a team. We're actually currently completing what is effectively a mid year global sales kickoff complete with training workshops and role playing all of which have been done in person. It's actually an example of some of these incremental investments that we're making right now that is.

Bill: You know, I think sales morale is high and we're working really well together as a team. We're actually currently completing what is effectively a mid-year global sales kickoff complete with training workshops and role playing, all of which have been done in person. It's actually an example of some of these incremental investments that we're making right now that Isabelle just alluded to on the last answer. You know, within that we've been prioritizing things that are not as sticky, so that's why you're seeing, you know, headcount is still growing in a very tempered way, but we are really focused on making sure that we are prepared with extremely solid foundations and continuously improving execution.

Al just alluded to.

Speaker 5: on the last answer. You know, within that, we've been prioritizing things that are not as sticky. So that's why you're seeing, you know, head count is still growing in a very tempered way. But we are really focused on making sure that we are prepared with extremely solid foundations and continuously improving execution so that when we do come out of this, that Braze is going to be, you know, right there ready to stop in the accelerator and springboard out of it.

On the last answer.

Within that we've been prioritizing things that are not as sticky. So that's why you're seeing head count is still growing at a very tempered way, but we are really focused on making sure that we are prepared with extremely solid foundations and continuously improving execution. So that when we do come out of this that raise is going to be right there ready to start.

Bill: So that when we do come out of this that braze is going to be, you know, right there ready to stop on the accelerator and springboard out of. Good.

On the accelerator and in springboard out of it.

Matt VanVliet: Thank you.

Alright, thank you.

Bill: I guess question comes from Matt VanVliet with the PIG. Please unmute yourself and ask your question. Great. Thanks for taking the question. Congrats on the quarter. I guess as you look at the somewhat of an acceleration on the 500 K plus net revenue retention rate. I'm curious if you're seeing even more sort of cross sell and new channel adoption there, or is this just sort of the natural expansion of large customers landing and expanding and already being at that size.

Speaker 3: Against question comes from Matt, then lead with CPIG. Please unmute yourself and ask your question.

Our next question comes from Matt Bottomley with D. P. I G. Please limit yourself and ask your question.

Speaker 4: Right, thanks for taking the question. Congrats on the quarter. I guess as you look at the somewhat of an acceleration on the 500 K plus.

Great. Thanks for taking my question Congrats on the quarter I guess as you look at the somewhat of an acceleration on the 500 K plus.

Speaker 4: Net revenue retention rate. I'm curious if you're seeing even more sort of cross sell and new channel like option there, or is this just sort of the natural expansion of, you know, large customers landing and expanding and already being at that size. Any additional color you can help that, particularly at the larger size customers where you're clearly gaining market share.

Net revenue retention rate.

Im curious if youre seeing even more sort of cross sell and new channel adoption there.

Or is this just sort of a natural expansion of large customers landing and expanding and already being at that size.

Bill: Any additional color you can help that particularly at the larger, larger size customers where you're clearly gaining market share. Yeah, so I think it's really just a combination of existing large customers that are continuing to grow, adopting more channels, more use cases were further penetrating organizations by getting into new geos and new business units that they have being able to support incremental new use cases. All of that comes with new volume and new monthly active users.

Any additional color you can help that particularly at the larger larger sized customers where you.

You are clearly gaining market share.

Speaker 2: Yeah, so I think it's really just a combination of existing large customers that are continuing to grow, adopting more channels, more use cases were further penetrating organizations by getting into new geos and new business units that they have. Being able to support incremental new use cases, all of that comes with new volume and new monthly active users. So I think there's sort of existing customers and we're also doing well in terms of large net new customers.

Yeah. So I think it's really just a combination of a lot of existing large customers that are continuing to grow adopting more channels more use cases, where further penetrating organizations by getting into new G. O. The new business units that they have being able to it says.

Support incremental new use cases, all of that comes with a new volume at Newmont and monthly active users.

Bill: So I think there's sort of existing customers and we're also doing well in terms of large net new customers. And so I think when you look at the contribution in our ARR from these large customers, you know, we are built for a broad range of customer sizes, but we're very well built for the top tier enterprise. And so that I think you're seeing the needs across those enterprises for highest level sophistication customer engagement platform.

So I think there is sort of existing customers and we're also doing well in terms of large net new customers.

Speaker 2: And so I think when you look at the contribution in our ARR from these large customers, you know, we are bill.

So I think when you look at the contribution in our air are from these large customers. You know we are built for a broad range of customer sizes, but we're very well built for the top tier enterprise and so that I think youre seeing the the needs across that those enterprises for highest level sophistication customer engagement platforms and is.

Speaker 2: for a broad range of customer sizes, but we're very well built for the top tier enterprise. And so that I think you're seeing the needs across that those enterprises for highest level sophistication customer engagement platforms. And as we continue to improve the product, increase our breadth of channels, we're just continuing to further penetrate these organizations. In addition, 43% of our revenue earned outside the US, that means we already have a solid presence globally. A lot of these organizations, large multi-nationals, we can continue to support them and increase our exposure with them across the globe. So, you're just seeing us continue to penetrate a very, a very, a great market that we think we have the right to win in.

Bill: And as we continue to improve the product, increase our breath of channels. We're just continuing to further penetrate these organizations in addition, you know, 43% of our revenue earned outside the US. That means we already have a solid presence globally. A lot of these organizations, large multinationals, we can continue to support them and increase our exposure with them across the globe.

We continue to improve the product increase our breadth of channels are we're just continuing to further penetrate these organizations. In addition, you know 43% of our revenue earned outside the U S that means we already have a solid presence globally a lot of these organizations.

Organizations large multinationals, we can continue to support them and increase our exposure with them across the globe. So I think you're just seeing us continue to penetrate a very a very a great market that we think we have the right to win.

Taylor McGinnis: So you're just seeing us continue to penetrate a very, a very, a great market that we think we have the right to win in. Great. Thank you.

Speaker 4: Great, thank you.

Great. Thank you.

Speaker 3: Our next question comes from Taylor McGinnis with UBS. Please unmute yourself and ask your question.

Isabelle: Next question comes from Taylor McKinnis with UBS. Please unmute yourself and ask your question. Yeah, hi. Thanks so much for taking my question. Isabel, just one for you. So the sequential CRPO growth was really solid. So aside from just strong execution and linearity, was there any impact from North Star or something one times in the one time in the renewal base to keep in mind. And the reason why I asked because as we look ahead at the environment stabilizing, could we start to see stronger growth quarter of recorder adjusting for seasonality, of course, throughout the year versus maybe what we saw last year.

Our next question comes from Catherine Mackinnon asked with UBS. Please on mute yourself and ask your question.

Speaker 9: Yeah, hi, thanks so much for taking my question. Isabel, just one for you. So this sequential CRPO growth was really solid. So aside from just strong execution and linearity, was there any impact from North Star or something one time in the renewal base to keep in mind? And the reason why I asked, because as we look ahead at the environment stabilizing, could we start to see stronger growth quarter of recorder adjusting for seasonality, of course, throughout the year versus maybe what we saw last year?

Yeah, Hi, thanks, so much for taking my question Isabelle just one for you. So the sequential CRP outgrowth is really solid so aside from just strong execution on linearity was there any impact from Northstar or something one times and one time in their renewal base keep in mind and the reason why I asked because that is when you look ahead at the environment stabilizing.

Could we start to see stronger core growth quarter over quarter adjusting for seasonality of course throughout the year versus maybe what we saw last year yeah.

Isabelle: Yeah, thanks for the question. So North Star did have an impact and actually if you, we're not going to quantify it specifically. But if you remove the impact of North Star, Q2 of this year looks a little bit more like Q2 of last year. If you want to look at sequential percentage growth in RPO, CRPO. So it looks a little bit closer to that. So that's that's one way to think about the impact of North Star.

Speaker 2: Yeah, thanks for the question. So North Star did have an impact, and actually if you, we're not gonna quantify it specifically, but if you remove the impact of North Star, Q2 of this year looks a little bit more like Q2 of last year. If you wanna look at sequential percentage growth in our PO, CRPO. So it looks a little bit closer to that. So that's one way to think about the impact of North Star.

Yeah. Thanks for the question So North Star did have an impact and actually if you were not going to quantify it specifically, but if if you remove the impact of Northstar Q2 of this year looks a little bit more like Q2 of last year. If you wanted to look at sort of sequential percentage growth in in our P. S.

E R. P O. So it looks a little bit closer to that so that's that's one way to think about the impact of Northstar.

Great. Thank you so much.

Brad Franklin: Thank you so much. I guess question comes from Brad Franklin with hyperfamilia. Please unmute yourself and ask your question. Thank you. Good afternoon. Great to see the change in the business, even if is about even if I back out North star, it looks like it's the highest dollar change in subscription revenue. And overall revenue ever, you got the acceleration in US accelerating growth internationally, accelerating RPO growth. It just feels like something's changed here. The strength, is it in one area? It feels pretty broad base. So my question here, does it feel the environment you're in or you're really executed in this environment, the new normal? Is it different now?

Speaker 3: I guess question comes from Brent, Brackuin with Piper Sandler. Please unmute yourself and ask your question.

Our next question comes from Brent <unk> with Piper Sandler Please limit yourself and ask your question.

Speaker 10: Thank you. Good afternoon. Great to see the change in the business. Even if it's about even if I back out North Star, it looks like it's the highest dollar change in subscription revenue and overall revenue ever. You've got the acceleration in U.S. accelerating growth internationally, accelerating our P.O. growth. It just feels like something's changed here. The strength.

Thank you.

Good afternoon, great to see that.

And the business, even if isabel even if I back out Northstar it looks like it's the highest dollar change in subscription revenue.

And overall revenue ever.

You've got the acceleration U S accelerating Roche internationally accelerating our PEO growth.

Just feels like something has changed here.

<unk>.

Speaker 10: is it in one area? It feels pretty broad base. So my question here, does it feel the environment you're in or you're really executed in this environment, the new normal? Is it different now? Or again, I know one quarter doesn't want to make a trend, but it does, I'm probably looking at it, it feels like there was a change here, and maybe I didn't appreciate it going into the quarter that changes and just trying to understand.

Is it one area it feels pretty broad based so my question here doesn't feel the environment, you're in or your ability to execute in this environment. The new normal is it different organic I know one quarter doesn't want to make a change.

Isabelle: Or again, I know one quarter doesn't want to make a trend, but it does outside looking at it, it feels like there was a change here and maybe I didn't appreciate it going into the quarter of the changes and just trying to understand to make sure if we fully do appreciate what it looks like. I think we're very pleased with our execution results in the context of the macro that we continue to live in.

A trend, but it does also looking at it it feels like there was a change here and maybe I didn't I appreciate you going into the quarter. The changes I'm just trying to understand to make sure.

Speaker 10: to make sure if we fully do appreciate

If we fully do appreciate what it looks like to be a little healthier environment your ability to at least execute this environment has changed.

Speaker 10: what it looks like to be a little healthier environment. Your ability to at least execute this environment has changed. Set.

How should we think about that I think we're very pleased with our execution results in the context of the macro that we continue to live and so we've been talking about investments that we've made across our sales organization over the last several quarters and bill talked about you know some of that continue on today and we're very pleased to see some of the results of that in Q2.

Isabelle: So we've been talking about investments that we've made across our sales organization over the last several quarters and Bill talked about some that continue on today. And we're very pleased to see some of the results of that in Q2. That said, the environment continues to be challenged.

Speaker 2: that we've made across our sales organization over the last several quarters and Bill talked about some that continue on today. And we're very pleased to see some of the results of that in Q2. That said, the environment continues to be challenged. And so while we are going to continue to invest in this improved execution across our sales organization, I think it is too soon to declare that we really feel like things are different on a persistent basis.

That said the environment continues to be challenged and so while we are going to continue to invest in is improved execution across our sales organization.

Bill: And so while we are going to continue to invest in this improved execution across our sales organization, I think it is too soon to declare that we really feel like things are different on a persistent basis. Well, you certainly surprised at this quarter. Hopefully we'll have more surprises in the next few quarters. Thanks.

Speaker 2: I think it is too soon to declare that we really feel like things are different on a persistent base.

I think it is too soon to declare that we really feel like things are different on a persistent basis.

Speaker 10: Well, you've certainly surprised at this quarter. Hopefully we'll not more surprises in the next few quarters. Thanks.

Well you certainly surprised that this quarter hopefully we'll have more surprises in the next few quarters. Thanks.

Brian Schwartz: Thanks, question comes from Brian Schwartz with Oppenheimer. Please unmute yourself and ask your question. Hi, thank you very much for taking my question. Following up on that last question for you, Bill, you know, the commentaries that the macro's unchanged and still challenging out there.

Speaker 3: Next question comes from Brian Schwartz with Oppenheimer. Please unmute yourself and ask your question.

Next question comes from Brian Schwartz Oppenheimer.

Does that mean.

Ask your question.

Speaker 6: Hi, thank you very much for taking my question. Following up on that last question, for you Bill, you know, the commentaries that the macro's unchanged and still challenging out there. So one day I ask you, what are you looking for to help you decide when to underwrite a higher level of new investments for the business for whenever the macro does turn?

Hi, Thank you very much for taking my question following up on that last question for you Bill you know the commentary that the macro is unchanged and still challenging out there. So wanted to ask you. What are you looking for to help you decide when to underwrite a higher level of new investments for the business went up.

Bill: So one day I feel what are you looking for to help you decide when to underwrite a higher level of new investments for the business for whenever the macro does turn thanks. Yeah, so first of all, we are actually still carrying some excess sales capacity and we've spoken about this in the past as well. So I think we have the ability to grow into and we're similarly investing on the demand on the demand generation side to make sure that we can have our sale for fee as productive as possible.

The macro does turn.

Speaker 5: Yeah, so first of all, we are actually still carrying some excess fails capacity and we've spoken about this in the past as well, that we think we have the ability to grow into and we're similarly investing on the demand on the demand generation side to make sure that we can have our sale for fee as productive as possible. And all of that is about remaining in a forward posture so that as things start to improve, we're able to pick them up immediately. We believe that we have a right to win across the market and that, as I mentioned at the very top of the call, I think there's been a lot of really exciting product innovation that we haven't seen the full potential of from a revenue generation perspective, simply due to the realities of a lot of frozen or declining budgets that marketers have been living through in this year. And so, part of it is going to be the conditions and confidence improving looking at brands extending their planning horizons. I think it's why we've seen a bit more relative strength in the enterprise and we have across the SMB sector simply because those businesses are more able to quickly shift back to planning on a multi-year time horizon and that's exactly where you're going to invest in a premium product like raise in order to set you up for your future. Some of the other things to that end that we would look at are going to be the venture activity and we're starting to see some green shoots there, but continuing to see just more investment flowing into more promising young businesses so that they can scale quickly. Part of it's going to be the calendar as well, getting into the next budget year so that businesses are ready to be back on an investment footing as they start to look ahead into, you know, into next calendar year, next fiscal year as we get to the end here. And in the meantime, we're going to continue to execute as well as we can and stay in control of everything that we can.

Yeah. So first of all we are actually still carrying some extra sales capacity and we've spoken about this in the past as well that we think we have the ability to grow into and we're similarly investing on the demand on the demand generation side to make sure that we can have our salesforce to be as productive as possible and all of that is about remain.

Bill: And all of that is about remaining in a forward posture so that as things start to improve, we're able to pick them up immediately. We believe that we have a right to win across this market and that, you know, as I mentioned at the very top of the call, you know, I think there's been a lot of really exciting product innovation that we haven't seen the full potential of from a revenue generation perspective.

In a forward posture, so that as things start to improve we're able to pick them up immediately we believe that we have a right to win across this market and that as I mentioned at the very top of the call I think theres been a lot of really exciting product innovation that we haven't seen the full potential of from a revenue generation perspective simply due to the realities of a lot of frozen or declining.

Bill: Simply due to the realities of a lot of frozen or declining budgets that marketers have been living through in this year. And so, you know, part of it is going to be the conditions and, you know, confidence improving looking at brands extending their planning horizons. You know, I think it's why we've seen a bit more relative strength in the enterprise and we have across, you know, the SMB sector simply because those businesses are more able to quickly shift back to planning on a multi your time horizon.

Budgets that marketers have been living through in this year and so.

Part of it is going to be the conditions and you know confidence improving looking at brands extending their planning Horizons. You know I think it's why we've seen a bit more relative strength in the enterprise and we have across the SMB sector simply because those businesses are more able to quickly shift back to planning on a multi year time horizon and that's exactly.

Bill: And that's exactly where you're going to invest in a premium product like raise in order to set you up for your future. You know, some of the other things to that end that we would look at are going to be the venture activity and we're starting to see some green shoots there. But continuing to see just more investment flowing into more promising young businesses so that they can scale quickly. Part of it's going to be the calendar as well, you know, getting into the next budget year so that businesses are ready to be back on an investment footing as they start to look ahead into, you know, into next calendar year next fiscal year as we get to the end here. And in the meantime, we're going to continue to execute as well as we can and say control of everything that we can.

<unk>, where youre going to invest in our premium products like raised in order to set you up for your future.

Rob Morelli: Thank you.

Some of the other things to that and that we would look at are going to be the venture activity and we're starting to see some green shoots there, but continuing to see just more investment flowing into more promising young businesses. So that they can scale quickly part of it is going to be the calendar as well you know getting into the next budget year. So that businesses are ready to be back on an investment footing as they start to look ahead.

Into you know into next calendar year next fiscal year as we get to the end here and in the meantime, we're going to continue to execute as well as we can and stay in control of everything that we can.

Speaker 11: Thank you.

Thank you.

Rob Morelli: Our next question comes from Rob Morelli with Needham. Please unmute yourself and ask your question. Hi, I'm interested in my question.

Speaker 3: Our next question comes from Rob Morelli with Meetham. Please unmute yourself and ask your question.

Our next question comes from Rob Marelli won't meet them meet yours.

And ask your question.

Speaker 12: I'm just saying my question in advance on the quarter to stop this copper here. As customers have looked to expand, I don't have the platform in the current macro. Are you guys able to touch on where they're expanding now compared to a year or two? There was an indifferent channel of capabilities. You're just still looking to understand where the incremental extension dollar is going. Thank you.

Alright, Thanks for taking my question and congrats on the quarter.

Bill: I encourage you on the corner to stop with Scott Berg here. As customers, what to expand? I don't have the platform in the current macro. Are you guys able to touch on, you know, where they're expanding now compared to a year or two, though, knows it in different channels or capabilities, you know, just still looking to understand where the incremental extent and dollars going. Thank you.

Corporate here as customers look to expand on the platform. The current macro are you guys going.

So I'm trying to where they're expanding now compared to a year or two ago. There was it in different channels or capabilities. So we can understand where the incremental dollars.

Speaker 5: Yeah, I would probably characterize it as being consistent with the caveat that it's conceptually consistent because obviously the product continues to expand in net new ways and we are seeing customers continue to adopt those. So for instance, you know, currents have had a really high high atatatrate for a long time. You know, a snowflake data sharing has gotten more capability. We're seeing more customers adopt that, but conceptually those are our very similar products.

Yeah.

Bill: Yeah, I would probably characterize it as being consistent with the caveat that it's conceptually consistent because obviously the product continues to expand in new ways and we are seeing customers continue to adopt those. So, for instance, you know, currents has had a really high attach rate for a long time. You know, snowflake data sharing has gotten more capability. We're seeing more customers adopt that, but conceptually those are very similar products in the sense that they help customers with their data export pipelines.

Yeah, I would broadly characterize it as being consistent with the caveat that it's conceptually consistent because obviously the product continues to expand and net new ways and we are seeing customers continue to adopt those so for instance, current so I just had a really high attach rate for a long time, you know that sounds like data sharing has gotten more capability, we're seeing more.

Customers adopt that but conceptually those are very similar products in the sense that they help customers with their data export pipelines. We also are seeing people add incremental capabilities or things like product catalogs, our audience tank or the predictive suite. These are not new but they they kind of followed this trend line of customers continuing to deploy new use cases on grades and so.

Speaker 5: with their data export pipelines. You know, we also are seeing people add incremental capability through things like product catalogs or audience think or the predictive suite. You know, these are net new, but they kind of follow this trend line of customers continuing to deploy new use cases on braze. And so I think that the drivers of it, which are, you know, how do we expand it into use cases? How do we both take over channels that are, you know, currently being run by other vendors? You know, we talk about that for new business in the term, in terms of vendor consolidation, but that vendor consolidation trend obviously exists once a person is already a brace customer as well as we supplant other vendors that might fill have been in their ecosystem when we first got going with them. And then, you know, things like WhatsApp are net new for everyone. And so those are great places where we see a lot of greenfield. We don't need to go in and replace a legacy vendor. And especially as we get the early proof points like the case study that I referenced with Grappie early on, you know, we can bring to life the ROI and the business case for more customers to be able to expand into those. And that's, you know, very exciting. But conceptually, that's similar to how we've gone to market with SMS over the last few years too. And so, you know, I think at a high level, we're able to exercise muscles that we're getting more and more familiar with over time as we go through Cross-Cell and UPSL. And the number of, you know, opportunities that we have to expand within our products or fishery, I continue to multiply as our R&D innovation, you know, continues at the rapid pace that it's at. I would say that it's all tempered by this you know, by the flat or, you know, declining budgets that a lot of marketers went through this year. But I'd like to think that, you know, we're also generating some pent up demand that when we start to see those budget levers loosen a little bit, you know, at whatever point in the future that we'll be ready to sell into.

Bill: You know, we also are seeing people add incremental capability through things like product catalogs or audience think or the predictive suite. You know, these are net new, but they kind of follow this trend line of customers continuing to deploy new use cases on Braze. And so I think that the drivers of it, which are, you know, how do we expanded into use cases? How do we both take over channels that are, you know, currently being run by other vendors?

I think that the drivers of it which are you know how do we expand into new use cases, how do we both take over channels that are currently being run by other vendors, we talk about that for new business in the term in terms of vendor consolidation, but that vendor consolidation trend. Obviously exists 11, a person is already a <unk> customer as well.

Bill: You know, we talk about that for new business in the term in terms of vendor consolidation, but that vendor consolidation trend obviously exists once a person is already a race customer as well as we supplant other vendors that might fill have been in their ecosystem when we first got going with them. And then, you know, things like WhatsApp are net new for everyone. And so those are great places where we see a lot of greenfield.

As we supplant other vendors that might still have been in their ecosystem. When we first got going with them and then you know things like whatsapp or net new for everyone and so those are great places, where we see a lot of Greenfield, we don't need to go in and replace a legacy vendor and especially as we get the early proof points like the case study that I referenced with Rappee early on.

Bill: We don't need to go in and replace a legacy vendor. And especially as we get the early points like the case study that I referenced with Grappie early on, you know, we can bring to life the ROI and the business case for more customers to be able to expand into those. And that's, you know, very exciting, but conceptually that's similar to how we've gone to market with us mess over the last few years too.

So we can bring to life, the ROI and the business case for more customers to be able to expand into those and that's very exciting, but conceptually that's similar to how we've gone to market with us mess over the last few years too and so I you know I think at a high level, where we're able to exercise muscles that we're getting more and more familiar with over time as we go through cross sell and upsell and the number.

Bill: And so, you know, I think at a high level, we're able to exercise muscles that we're getting more and more familiar with over time as we go through cross sell and up sell. And the number of, you know, opportunities that we have to expand within our product surface area continue to multiply as our R&D innovation, you know, continues at the rapid pace that it's at. I would say that it's all tempered by this, you know, by the flat or, you know, declining budgets that a lot of marketers went through this year, but I'd like to think that, you know, we're also generating some pent up demand that when we start to see those budget levers loosen a little bit, you know, at whatever point in the future that we'll be ready to sell into those.

You know opportunities that we have to expand within our product surface area continue to multiply as our R&D innovation continues at a rapid pace that its that I would I would say that it's all tempered by this.

By the flat or declining budgets at a lot of marketers went through this year, but I I'd like to think that you know we're also generating some pent up demand that when we start to see those budget levers I'll loosen a little bit.

Whatever point in the future that will be ready to sell into this.

Speaker 13: Baby, they're coming.

Thank you for color.

Speaker 3: We have time for one more question. The final question will come from you and Kim with Luke Papadal. Please unmute yourself and ask your question.

Operator: We have time to one more question.

We have time for one more question. The final question will come from <unk>, Kim with <unk> capital.

Operator: The final question will come from you and Kim with capital. Please unmute yourself and ask your question. Thank you.

It yourself and ask your question. Thank.

Speaker 14: Thank you. I'll make you a quick one, hey Bill, as you roll out, as you roll out more generative AI based product and solutions, how are you thinking about pricing model around those products? As you can see from a couple of large high profile vendors, they're pretty premium on their generate, again, AI products. And then maybe Isabelle can talk about the cost-battle declaration on these products.

Bill: I'll make you a quick one. Hey, Bill, as you roll out, as you roll out more generative AI based products and solutions, how are you thinking about pricing model around those products? As you can see from a couple of large high profile vendors, they're pretty premium on premium on their general gen AI products. And then maybe Isabelle can talk about the cost of the creation on these products. Yeah, so I think that a lot of the gen AI work that we're doing to help with customer productivity or, you know, with marketer productivity, we're not looking to keep those amazing tools out of the hands of marketers because we know that they lead to higher usage of braze and we're able to monetize them in that way.

Thank you Amit.

I'll make just a quick one hey, bill as you rollout as you rollout more generative AI based products and solutions.

Thinking about pricing model around those plan on some but as you can see it from a couple of large high profile vendors there.

They're pretty premium or.

Opinion under general Jenny I upon us.

And then maybe is it bill can talk about the cost side of equation on these products.

Speaker 5: Yeah, so I think that a lot of the Gen A I work that we're doing to help with customer productivity, or with marketer productivity, we're not looking to keep those amazing tools out of the hands of marketers because we know that they lead to higher usage of braze and we're able to monetize them in that way. And I spoke about that earlier, if we're helping a marketer deploy more variants more quickly to help them check their copyrighting or generator inspire themselves to have new content strategies if we're helping them be able to use a more technical capability to recode generation or other sorts of schema or syntax checking. These are all things that really encourage uses of braze that we already monetize on our own. And so we're not looking necessarily for those aspects of Gen A I that help with the productivity of the marketer to be monetized independently. But there are other aspects that incorporate in LLMs or other sorts of transformer models. I mentioned the recommendation engine earlier. The things like the predictive suite and other aspects of automated decision making that will get deployed into both our classification layer and our orchestration layer that we think there's both an appetite to pay more for those are an or an expectation based off of other investments that have been made. And they just produce a tremendous amount of value in terms of improved ROI and improved results for marketers. And so I think we're going to continue to take a hybrid approach across those. And we're going to look for them to all really feed each other in

Yeah, So I think that a lot of the Gen. AI work that we're doing to help with customer productivity.

With marketer productivity, we're not looking to keep those amazing tools out of the hands of marketers because we know that they lead to higher usage of raze and we're able to monetize them in that way and I spoke about that earlier you know if we're helping a marketer to play more variance more quickly to help them check their copywriting or generator inspire themselves to have new content strategies.

Bill: And I spoke about that earlier, you know, if we're helping a marketer, deploy more variants more quickly to help them check their copywriting or generator inspire themselves to have new content strategies if we're helping them be able to, you know, use a more technical capability through code generation or other sorts of schema or syntax checking, you know, these are all things that really encourage uses of braze that we already monetize on our own. And so we're not looking necessarily for those aspects of gen AI that help with the productivity of the marketer to be monetized independently, but there are other aspects that incorporate in, you know, LLMs or other sorts of transformer models.

If we're helping them be able to use a more technical capability through co generation or other sorts of schema or syntax checking. These are all things that really encourage uses have raised that we already monetize on our own and so we're not looking necessarily for those aspects of gen. AI that help with the productivity of the marketer to be monetize independently.

But there are other aspects that incorporate and L EMS or other sorts of transformer models I mentioned, the personal recommendation engine earlier things like the predictive suite and other aspects of the automated decision, making that will get deployed into both our classification layer and orchestration layer that we think there's both an appetite to pay.

Bill: I mentioned the personal or the recommendation engine earlier, the things like the predictive suite and other aspects of automated decision making that will get deployed into both our classification layer and our orchestration layer. That we think there's both an appetite to pay more for those are an or an expectation based off of other investments that have been made and they just produce a tremendous amount of value in terms of improved ROI and improved results for marketers.

More for those are in or an expectation based off of other investments that have been made and they just produce a tremendous amount of value in terms of improved ROI and improve results for marketers and so I think we're going to continue to take a hybrid approach across those and we're going to look for them to all I really feed each other and.

Bill: And so, you know, I think we're going to continue to take a hybrid approach across those and we're going to look for them to all really feed each other in, you know, in mutually self reinforcing ways, but we always have the tremendous advantage of being able to, you know, build based off of the monthly active user based off of the message volumes. And to the extent that we incorporate more value into value generation and each monthly active user that gives us more pricing power within that.

Speaker 5: in mutually self-reinforcing ways, but we always have the tremendous advantage of being able to build based off of the monthly active user, based off of the message volumes, and to the extent that we incorporate more value into value generation into each monthly active user, that gives us more pricing power within that. And you've actually seen this for several years now, where our revenue growth rate has outpaced our monthly active user growth rate for quite a while. A big part of that is because we continue to add more productivity for marketers that use braze, and then they're able to extract more ROI out of the platform, and we're able to capture that very smoothly through monthly active user growth.

In mutually self reinforcing ways, but we always have the tremendous advantage of being able to bill based off of the monthly active user base off of the message volumes I and to the extent that we incorporate more value into value generation at each monthly active user that gives us more pricing power within that I mean, you've actually seen this for several years now.

Bill: And you've actually seen this for several years now where our revenue growth rate has outpaced our monthly active user growth rate for quite a while. A big part of that is because we continue to add more productivity for marketers that use braze and then they're able to extract more ROI out of the platform and we're able to capture that very smoothly through monthly, and the only thing I would say on the cross side is I do not expect, I talked about this a little bit earlier in the Q&A.

There are revenue growth rate has outpaced our monthly active user growth rate for quite a while a big part of that is because we continue to add more productivity for marketers that used raise and then they are able to extract more ROI out of the platform and we're able to capture that very smoothly through monthly active user pricing.

Speaker 2: And the only thing I would say on the cross side is, I do not expect, I talked about this a little bit earlier in the Q&A, don't expect the impact of AI to sort of be margin-delutive. So we are continuing to remain within our long-term margin targets of 67 to 72%. And embedding the AI functionality in that cost structure, we don't break out the individual components, but don't look for that to be margin-difficient.

And the only thing I would say on the cost side is I do not expect and I have talked about this a little bit earlier in the Q&A I.

Bill: Don't expect the impact of AI to sort of be margin dilutive. So we are continuing to remain within our long term margin targets of 67 to 72% and embedding the AI functionality in that cost structure. We don't break out the individual components, but don't look for that to be margin dilutive.

Don't expect the impact of AI to sort of be margin dilutive. So where we are continuing to remain within our long term margin targets of 67% to 72% and embedding.

AI functionality in that cost structure, we don't break out the individual components, but don't look for that to be margin dilutive.

Speaker 3: That concludes the Q&A. I will now pass the call back to Bill to closing remarks.

Next concludes the Q&A. I will now pass the call back to Bill, the closing remarks. Yeah, I just want to thank everybody for joining the call today. We appreciate your continued support and look forward to seeing you at a conference or on the road soon, or for the next journey. It's calling about three months.

This concludes the Q&A and I'll now pass the call back to Dallas 19 remarks.

Speaker 5: I just want to thank everybody for joining the call today. We appreciate your continued support and look forward to seeing you at a conference or on the road soon or for the next journey. It's calling about three months.

I just want to thank everybody for joining the call today. We appreciate your continued support and look forward to seeing you at a conference or on the road soon or for the next earnings call in about three months.