Q4 2024 Braze Inc Earnings Call

Unnamed Speaker: Non-GAAP Operating Income and Positive Free Cash Flow. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements.

The free cash flow.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today, we assume no obligation to update any such forward looking statements for a discussion of the material risks and uncertainties that could affect our actual results. Please refer to the risks identified in todays.

Unnamed Speaker: For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and our SEC filings, both available on the Investor Relations section of our website. I'd also like to remind you that today's call will include certain non-GAAP financial measures used by management to evaluate our ongoing operations and to aid investors in further understanding the company's fiscal fourth quarter 2020 performance in addition to the impact these items have on the financial results. Please refer to the reconciliations of our non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. GAAP included in our earnings release under the Investor Relations section of our website. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with U.S. GAAP.

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

I'd also like to remind you that today's call will include certain non-GAAP financial measures used by management to evaluate our ongoing operations and to aid investors in further understanding the company's fiscal fourth quarter 2020 performance. In addition to the impact these items have on our financial results.

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. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of final.

Performance prepared in accordance with U S GAAP and now I'd like to turn the call over to Bill.

Bill: And now, I'd like to turn the call over to Bill. Thank you, Chris, and good afternoon. We delivered another strong fourth quarter, generating $131 million in revenue, up 33% versus the prior year and 6% compared to the prior quarter, again demonstrating the high ROI and long-term value of the Braze customer engagement platform. Our solid performance comes despite a selling environment that has remained challenging all year due to macro considerations and its associated scrutiny on budget. We have continued advancing our strategy and evolving our execution in order to simultaneously deliver strong revenue growth and enhanced operating efficiency, improving non-gap gross margins by 90 basis points year-over-year and non-gap operating margin by over 1,100 compared to the fourth quarter of last year.

Bill: Thank you, Chris and good afternoon, everyone. We delivered another strong fourth quarter generating $131 million in revenue up 33% versus the prior year and 6% compared to the prior quarter again, demonstrating the high ROI and long term value of the brace customer engagement platform.

Bill: Our solid performance comes despite a selling environment that has remained challenging all year due to macro considerations and its associated scrutiny on budgets. We've continued advancing our strategy and evolving our execution in order to simultaneously deliver strong revenue growth and enhanced operating efficiency, improving non-GAAP gross margins by 90 basis points year over year and non-GAAP operating margin by.

Over a 100 basis points compared to the fourth quarter of last year. We were again pleased with the strength of our enterprise business as we continue to capitalize on the legacy vendor replacement cycle and consolidation trend.

Bill: We were again pleased with the strength of our enterprise business as we continue to capitalize on the legacy vendor replacement cycle and consolidation. And we achieved record upsell this quarter as customers continue to grow with Braze, adopting more channels, deploying more use cases, increasing their volumes, and adding new business units and geography. In fact, this quarter, we secured our first eight-figure customer through Upsell, a media and entertainment conglomerate who has consistently grown with Braze over the past eight years. Continued expansion opportunities like these with our long-term customers speak to our pace of innovation, stability, and reliability at scale, and our leadership in the customer engagement category. As enterprise remains a strength for us, our roster of $500,000 plus ARR customers continues to grow as well, rising to 202 in the quarter, up 29% year over year. This is a testament to how customers continue to leverage rich first-party data and advanced artificial intelligence to drive sophisticated cross-channel customer engagement at scale. Notable new business wins and upsells in the quarter include AB InBev, Bojangles, DraftKings, FanDuel, FlixSE, which is the parent company of both FlixBus and Greyhound, and Nestle Purina, among many others.

Bill: And we achieved record upsell this quarter as customers continue to grow with phrase adopting more channels deploying more use cases, increasing their volumes and adding new business units and geographies and.

Bill: In fact this quarter, we secured our first eight figure customers through upsell with the media and entertainment conglomerate, who has consistently grown the phrase over the past eight years.

Bill: Continued expansion opportunities like these with our long term customers speaks to our pace of innovation stability and reliability at scale and our leadership of the customer engagement category as enterprise remains a strength for us our roster of $500000 plus are our customers continues to grow as well rising to 202 in the quarter up 29% year over year, a testament to how come.

Bill: <unk> continue to leverage Rich first party data and advanced artificial intelligence to drive sophisticated cross channel customer engagement at scale notable new business wins and Upsells in the quarter include a b Inbev Bojangles' draft Kings Fanjul Flix assay, which is the parent company of both flex bus and Greyhound and Nestle Purina among many others.

Bill: We're also pleased to share that earlier in fiscal year 2024, we secured new relationships with both DoorDash and Wendy's. The performance, reliability, and scalability of our platform is a core component of what many of these brands appreciate about Borda. Earlier this week, we published scalability and performance metrics for our full calendar year 2023, which included over 2.6 trillion outgoing actions, including the sending of messages, execution of webhooks, and other canvas operations that transform data and manage audio. Inbound, we processed over 7.5 trillion API calls, with 99.99% average system-wide uptime across all customers and products.

Bill: We're also pleased to share that earlier in fiscal year 2024, we secured new relationships with both door dash and Wendy's the performance reliability and scalability of our platform is a core component of what many of these brands appreciate about brace.

Bill: Earlier this week, we published scalability and performance metrics for our full calendar year 2023, which included over $2 six trillion outgoing actions, including the sending of messages execution of Webhooks and other campus operations that transform data and manage audiences.

Bill: Inbound we processed over seven and a half trillion API calls with 90, 999% average system wide uptime across all customers and products, whether those API calls originate from our SDK is running in our customers' products partner integrations or custom software running in our customers back and these API calls deliver constantly evolving context about users.

Bill: Whether those API calls originate from RSDKs running in our customers' products, partner integrations, or custom software running in our customers' backends, these API calls deliver constantly evolving context about users and their actions in order to trigger messages and drive personalization strategies, showcasing the growing sophistication among Braze customers as they tailor their communications to each individual recipient. During 2023, we also saw year-over-year growth of over 60% for messages sent with Braze Canvas, our no-code visual development environment, which marketers use to quickly implement sophisticated customer engagement strategies. This increase in usage reflects a rise in multi-step cross-channel messaging flows and the continued adoption of sophisticated orchestration, experimentation, and personalization. All supported by Sage AI. Designed from the ground up to scale with demand, support massive scale at speed, and minimize outages, our system is exceptionally reliable, even when faced with some of the world's largest consumer audiences. All of these metrics build on our privacy and security by design, which integrates safeguards at every level of our operations and is reflected in our privacy processes and security certifications.

Bill: Their actions in order to trigger messages and drive personalization strategies showcasing the growing sophistication among brace customers as they tailor the communications to each individual recipient. During 2023, we also saw year over year growth of over 60% for messages sent with brace canvas are no code visual development environment, which marketers use to quickly implement.

Bill: <unk> sophisticated customer engagement strategies. This increase in usage reflects a rise in multi step cross channel messaging flows and the continued adoption of sophisticated orchestration experimentation and personalization techniques all supported by Sage AI.

Bill: Designed from the ground up to scale with demand support massive scale at speed and minimize outages. Our system is exceptionally reliable even when faced with some of the world's largest consumer audiences.

All of these metrics build on our privacy and security by design, which integrates safeguards at every level of our operation and is reflected in our privacy processes and security certifications as the customer engagement landscape evolves, we continue to win against the large field of competitors, who cannot reliably deliver on real time use cases have limited channel selection or flexibility a lower sophistication ceiling.

Bill: As the customer engagement landscape evolves, we continue to win against a large field of competitors who cannot reliably deliver on real-time use cases, have limited channel selection or flexibility, a lower sophistication ceiling, or simply don't scale. Similarly, we continue to make progress replacing legacy marketing clouds, as marketers realize that those clouds' disjointed and siloed solutions are increasingly unsuited for modern customer engagement. This quarter, we replaced legacy marketing clouds at a European-based transportation company, a leading American health nonprofit, a UK-based QSR, and a Japan-based digital software developer, among others. In addition, this quarter, we replaced Point Solution competitors at a design and collaboration platform, an athletics clothing retailer, and a mobile gaming platform. As I mentioned last quarter, we've been very happy with the execution of our sales team in the second half If your organization has a person whose job is customer engagement, we believe Braze is the best-in-class solution.

Bill: We're simply don't scale.

Bill: Similarly, we continue to make progress, replacing legacy marketing clouds as marketers realized that those clouds disjointed and Siloed solutions are increasingly unsuited for modern customer engagement use cases.

Bill: This quarter, we replaced legacy marketing clouds at a European based transportation company, a leading American health nonprofit a U K based <unk> and a Japan based digital software developer among others. In addition, this quarter, we replace point solution competitors at a design and collaboration platform and athletic clothing retailer and a mobile gaming company as I mentioned last quarter.

Bill: We've been very happy with the execution of our sales team in the second half as we continue to navigate a choppy macro and our competitive wins across verticals and geographies demonstrates both the flexibility and versatility of our platform as well as the enormous future potential of our business.

Bill: <unk> has the right to compete and win with virtually any organization that S ambition or sophistication around customer engagement. If your organization has a person who's job is customer engagement. We believe <unk> is the best in class solution for them in order to maintain our technical lead we continue to invest in improving the capabilities of the <unk> platform with the wealth of data capture by Braves and.

Bill: In order to maintain our technical lead, we continue to invest in improving the capabilities of the Braze platform. With the wealth of data captured by Braze and the introduction of AI-powered, Marketers are able to enhance relevance and performance while saving time and energy in production. In order to meet the demands of this paradigm shift, we are infusing AI throughout our SAC to help marketers efficiently implement highly personalized cross-channel strategies. Last year, we launched Sage AI by Braze to inform and scale personalized, sophisticated, and lasting experiences that consumers love. At that time, we spoke to you about some of the exciting enhancements under development that further empower brands to embrace the craft of, allowing them to move beyond simply sending messages. Just yesterday, we announced new features that simplify and accelerate the ability of marketers to tailor recommendations to each unique customer, further unlocking sophisticated personalization and prediction at scale, inspiring creativity, and driving high-value actions. At the same time, each feature is easily accessible and located intuitively across the marketer's workflow to support more creative testing, optimization, and personalization.

Bill: The introduction of AI powered tools marketers are able to enhance relevance and performance, while saving time and energy and production.

Bill: In order to meet the demands of this paradigm shift we're infusing AI throughout our Sac to help marketers efficiently implement highly personalized cross channel strategies.

Bill: Last year, we launched Hai vibrate to inform and scale personalized sophisticated and lasting experiences that consumers love.

Bill: At that time, we spoke to you about some of the exciting enhancements underdevelopment that further empower brands to embrace the craft of customer engagement, allowing them to move beyond simply sending messages.

Bill: Just yesterday, we announced new features that simplify and accelerate the ability of marketers to tailor recommendations to each unique customer further unlocking sophisticated personalization and prediction at scale, inspiring creativity and driving high value actions from customers.

Bill: At the same time each feature is easily accessible and located intuitively across the marketers workflow to support more creative testing optimization and personalization.

Bill: These innovations include AI items, Personalized Path, Tone Control, and Estimated Reel Open Email Rate. All of these features leverage comprehensive first-party data inputs in real-time, allowing for smarter decision-making and powering better business. Let me take a moment to walk you through each of these.

Bill: These innovations include AI item recommendations personalized path tone control and estimated real open email rates.

Bill: All of these features leverage comprehensive first party data inputs in real time, allowing for smarter decision, making and powering better business outcomes. Let me take a moment to walk through each of these offerings last fall I mentioned the development of AI item recommendations today I'm pleased to announce that this engine, which uses AI to enhance message relevance with better product service and catalog.

Bill: Last fall, I mentioned the development of AI items. Today, I'm pleased to announce that this engine, which uses AI to enhance message relevance with better product, service, and catalog suggestions, is now generally available. AI item recommendations leverage cutting-edge, transformer-driven AI models and is layered on top of Braze catalogs to enable easier setup and tighter integration with the rest of the Braze stack.

Bill: Commendations is now generally available AI.

Bill: Hey item recommendations leverages cutting edge transformer, driven AI models and is layered on top of brace catalogs to enable easier setup and tighter integration with the rest of the brain stack. Accordingly. These recommendations can be use across every channel that brain offers and as part of sophisticated cross channel journeys in Kansas, We believe AI item recommendations will increase campaign revenue.

Bill: Accordingly, these recommendations can be used across every channel that Braze offers and as part of sophisticated cross-channel journeys in Canvas. We believe AI item recommendations will increase campaign revenue and improve customer loyalty for brands that deploy them. I'm also pleased to announce the release of Personalized Paths, an automated decision-making feature within Canvas that scales personalization by matching each customer with the message, copy, creative, channel, and offer that they are most likely to engage with. It can be incorporated at any point in a Canvas journey and used across any channel, allowing it to be combined with sophisticated personalization and orchestration.

Bill: And improve customer loyalty for the brands to play it I'm also pleased to announce the release of personalized paths and automated decision, making feature within canvas that scales personalization by matching each customer with the message copy creative channel and offer that they are most likely to engage with.

Bill: It can be incorporated at any point in a canvas journey and used across any channel, allowing it to be combined with sophisticated personalization and orchestration techniques.

Bill: Personalized Paths enables marketers to leverage AI to deliver more value to their customers through deeply customized experiences while also saving time for them and their colleagues in engineering, even as they delve into more sophisticated experimentation. In addition to the work we're doing using our own custom models, we also continue to deliver productivity enhancements that utilize prompt engineering and fine-tuning of publicly available models like OpenAI's GPT-4. Recall that we integrated ChattyPT and Dolly into Braze in May and December of 2022, respectively, before the AI hype of early, and it's been exciting to see how customers have used and experimented with these features. We believe there is even more potential for marketing teams to quickly generate and validate creative assets to support more effective campaign creation and testing while maintaining brand voice and safety. Now we have built-in generative functionality we call Tone Control, which helps marketers dictate and control the tone of AI-generated copy directly through voice.

Bill: Personalized paths enables marketers to leverage AI to deliver more value to their customers through deeply customized experiences while also saving time for them and their colleagues and engineering, even as they delve into more sophisticated experimentation.

Bill: In addition to the work we're doing using our own custom models. We also continue to deliver productivity enhancements that utilized prompt engineering and fine tuning of publicly available models like opening is GPT for.

Bill: Recall that we integrated chat GPT and Dolly Integrase in May and December of 2022, respectively. Before the AI hype of early 2023, and it's been exciting to see how customers have used <unk> experimented with these features we believe there's even more potential for marketing teams to quickly generate and validate creative assets to support more effective campaign creation and testing.

Bill: While maintaining brand voice and safety now.

Bill: Now we have built in generative functionality, we called tone control, which helps marketers dictate and control the tone of AI generated copy directly embrace.

Bill: This can save marketers time, help them craft more authentic experiences, foster additional creativity, quickly generate variance for testing and experimentation, and help eliminate. Finally, I'd like to highlight our Estimated Real Open Rates feature, another use of machine learning that allows Braze customers to continue to rely on data-driven content strategies, even as changes in the privacy landscape obscure certain data. This solution addresses the changes made by Apple's Mail Privacy Protection Program, offering marketers a One early AI customer success story that I'd like to highlight is from Koro Drogerie, a German superfood e-commerce company, which tested our new AI item recommendation offering to help determine what products to offer to which customers and drive sales. Coro syncs their product catalog into Braze in real time with Braze's cloud data and can then intelligently suggest product offerings tailored to individual customer preferences.

This can save marketers' time help them craft more authentic experiences foster additional creativity quickly generate variance for testing and experimentation and help eliminate mistakes.

Bill: Finally, I'd like to highlight our estimated real open rates feature another use of machine learning that allows <unk> customers to continue to rely on data driven content strategies, even as changes in the privacy landscape obscure certain data inputs.

Bill: This solution addresses the changes made by Apple's mail privacy protection program operating marketers a more complete view of open rates for email campaigns by controlling for the uncertainty created by mill privacy protections machine opens one.

Bill: One early AI customer success story that I'd like to highlight is from Corot drove jury a German super food E Commerce company, which tested our new AI item recommendation offering to help determine what products to offer to which customers and drive purchase decisions.

Bill: <unk> thinks their product catalog integrase in real time with braces cloud data ingestion feature and can then intelligently suggest products offerings tailored to individual customer preferences.

Bill: By combining the simplicity of Braze's cloud data ingestion with the power of AI, Coro gained valuable insights into new user behaviors, empowering them to deliver highly personalized recommendations from their extensive catalog of over a thousand products. In addition, they drove these improved results with significantly less effort, automating everything from the data warehouse to the personalized recommendations seen by customers.

Bill: By combining the simplicity of races cloud data ingestion with the power of AI item recommendation Corot gained valuable insights into new user behaviors empowering them to deliver highly personalized recommendations from their extensive catalog of over 1000 products.

Bill: In addition, they drove these improved results with significantly less effort automating everything from the data warehouse to the personalized recommendation as seen by customers.

Bill: Most importantly, Koro tripled their purchase rates when personalized product suggestions were incorporated into their onboarding messaging flows. Our pace of innovation and ease of use also continue to earn industry accolades for our excellence in software products. Recently, G2, the largest and most trusted marketplace for software, recognized Braze across six categories in its annual Best Software Awards, including the categories Best Software Products, Global Software Companies, Highest Satisfaction Products, Marketing and Digital Advertising Products, Products for Enterprise, and Products for Mid-Price.

Bill: Most importantly, corot tripled their purchase rates when these personalized product suggestions were incorporated into their onboarding messaging close.

Bill: Our pace of innovation and ease of use also continue to earn industry accolades for our excellence and software products recently G to the largest and most trusted marketplace for software recognize sprays across six categories and its annual best software awards, including the categories Best software products Global software companies highest satisfaction products marketing.

Bill: And digital advertising products products for enterprise and products for mid market.

Bill: Our solutions inclusion in the G2 BESA Software Awards is a testament to the strength and loyalty of our customer community and our ability to deliver high ROI solutions that our customers need to power outstanding customer engagement for their users. Before I turn it over to Isabelle, I want to update you on our latest social impact. In 2021, Braze joined the pledge one percent, through which we have reserved nearly a million shares of our Class A Common Stock to donate to a donor advisor. Thus far, Braze has given more than $1 million in grants via our Braze for Social Impact Fund, of which more than half have been directed by employee grants. Our social impact mission is to amplify employee impact, to create opportunity for underserved groups within our communities, and to accelerate a science-based climate. We look forward to growing these efforts through continued employee advocacy and participation over time. Thank you for your continued support of Braze.

Bill: Our solutions inclusion and the G tube vessels software awards is a testament of the strength and loyalty of our customer community and our ability to deliver high ROI solutions that our customers need to power outstanding customer engagement for their users before I turn it over to Isabella I want to update you on our latest social impact initiatives in 2020, one brace joined the pledge 1% movement.

Bill: Through which we have reserved nearly 1 million shares of our class a common stock to donate to a donor advised fund thus.

Bill: Thus far <unk> surpassed more than $1 million in grants VR brace for social impact fund of which more than half had been directed by employee grant programs. 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 through continued employee advocacy and.

Bill: Participation overtime.

Bill: Thank you for your continued support of brace we are very excited for the year ahead, our strategy of driving innovation to create industry, leading solutions remains unchanged and we believe our investments in new product growth channels, and advanced AI and machine learning coupled with strong secular customer engagement tailwind will keep raise on the path to becoming the industry standard for cross channel customer engagement and now.

Isabelle: We are very excited for the year ahead. Our strategy of driving innovation to create industry-leading solutions remains unchanged, and we believe our investments in new product growth, channels, and advanced AI and machine learning, coupled with strong secular customer engagement tailwinds, will keep Braze on the path to becoming the industry standard for cross-channel customer engagement. Now, I'll turn the call over to Isabelle.

Bill: I'll turn the call over to Isabelle.

Isabelle: Thank you, Bill, and thank you, everyone, for joining us today. As Bill stated, we reported a strong fourth quarter with revenue increasing 33 percent year over year to $131 million, driven by a combination of existing customer contract expansions, renewals, and new business. The quarter included a contribution of slightly more than $3 million in revenue from the Northstar acquisition, which closed in June. Subscription revenue remains the primary component of our total top line, contributing 96% of our fourth quarter revenue, while the remaining 4% represents a combination of recurring professional services and one-time configuration and onboarding. The total customer count increased 15% year-over-year to 2,044 customers as of January 31, up 274 from the same period last year and up 33 from the prior quarter.

Thank you Bill and thank you everyone for joining us today as Bill stated, we reported a strong fourth quarter with revenue, increasing 33% year over year to $131 million driven by a combination of existing customer contract expansions renewals and new business.

Isabelle: The quarter included a contribution of slightly more than $3 million in revenue from the Northstar acquisition, which closed in June.

Isabelle: Subscription revenue remains the primary component of our total topline contributing 96% of our fourth quarter revenue, while the remaining 4% represents a combination of recurring professional services and one time configuration and onboarding fees.

Isabelle: Total customer count increased 15% year over year to 2044 customers as of January 31 up 274 from the same period last year and up 33 from the prior quarter. Our total number of large customers, which we define as those spending at least $500000 annually grew 29% year over year to 202.

Isabelle: Our total number of large customers, which we define as those spending at least $500,000 annually, grew 29% year-over-year to 202 and, as of January 31, contributed 60% to our total ARR. This compares to a 57% contribution as of the same quarter last year. Measured across all customers, dollar-based net retention was 117%, while dollar-based net retention for our large customers was 120%. Expansion was again broadly distributed across industries and geographic regions. Revenue outside the U.S. contributed 44% of our total revenue in the fourth quarter compared to 43% in the prior-year quarter and in line with the third quarter of the year.

Isabelle: And as of January 31 contributed 60% to our total <unk>. This compares to a 57% contribution as of the same quarter last year.

Isabelle: Measured across all customers dollar based net retention was 117% while dollar based net retention for our large customers with 120%.

Isabelle: Expansion was again broadly distributed across industries and geographic regions revenue outside the U S contributed 44% of our total revenue in the fourth quarter compared to 43% in the prior year quarter and in line with the third quarter of this year in the fourth quarter. Our total remaining performance obligation was $639 million up 40 <unk>.

Isabelle: In the fourth quarter, our total remaining performance obligation was $639 million, up 40% year-over-year and up 14% sequentially. Current RPO is $409 million, up 31% year-over-year and up 11% sequentially. The year-over-year increases were driven by contract renewals and upsells and the signing of new customer contracts. Overall, the dollar-weighted contract length is slightly above two years and increased modestly during the quarter as more customers committed to longer-term relationships with Braze. Non-GAAP gross profit in the quarter was $88.9 million, representing a non-GAAP gross margin of 67.9%.

Isabelle: Sent year over year and up 14% sequentially.

Isabelle: Current RPI was $409 million up 31% year over year and up 11% sequentially. The.

Isabelle: The year over year increases were driven by contract renewals and up sells and the signing of new customer contracts overall dollar weighted contract length, it's slightly above two years and increase modestly during the quarter as more customers committed to longer term relationships with brain.

Isabelle: non-GAAP gross profit in the quarter was $88 $9 million, representing a non-GAAP gross margin of 67, 9%. This compares to a non-GAAP gross profit of $66 2 million and non-GAAP gross margin of 67% in the fourth quarter of last year. The 90 basis point year over year margin improvement was driven by ongoing personnel efficiencies.

Isabelle: This compares to a non-GAAP gross profit of $66.2 million and a non-GAAP gross margin of 67% in the fourth quarter of last year. The 90-basis-point year-over-year margin improvement was driven by ongoing personnel efficiencies and the continued cost optimization of our technology stack, partially offset by increased adoption of premium messaging. Non-GAAP sales and marketing expense was $55.2 million, or 42% of revenue, compared to $46.5 million, or 47% of revenue, in the prior year quarter. 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. Non-GAAP R&D expense was $21.2 million, or 16% of revenue, compared to $19 million, or 19% of revenue, in the prior year quarter.

Isabelle: And the continued cost optimization of our technology stack, partially offset by increased adoption of premium message channels.

Isabelle: non-GAAP sales and marketing expense was $55 $2 million or 42% of revenue compared to $46 $5 million or 47% of revenue in the prior year quarter. While the dollar increase reflects our year over year investments in head count cost to support our ongoing growth and global expansion. The improved efficiency reflects our disciplined investment approach.

Isabelle: Two resource deployment across our go to market organization.

Isabelle: non-GAAP R&D expense was $21 $2 million or 16% of revenue compared to $19 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.

Isabelle: 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-GAAP G&A expense was $20 million, or 15% of revenue, compared to $17.5 million, or 18% of revenue in the prior year quarter. The dollar increase was driven by investments to support our overall company growth, including headcount costs and increases in software subscriptions and licensing. The non-GAAP operating loss was $7.5 million compared to a non-GAAP operating loss of $16.7 million in the prior year quarter.

Isabelle: non-GAAP G&A expense was $20 million or 15% of revenue compared to $17 $5 million or 18% of revenue 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 non.

Isabelle: non-GAAP operating loss was $7 $5 million compared to a non-GAAP operating loss of $16 $7 million in the prior year quarter.

Isabelle: non-GAAP net loss attributable to <unk> shareholders in the quarter was $3 $5 million or a loss of four cents per share compared to a loss of $13 $7 million or a loss of <unk> 14 per share in the prior year quarter.

Isabelle: Now turning to the balance sheet and cashless statement, we ended the quarter with $480 million in cash cash equivalents restricted cash and marketable securities cash provided by operations during the quarter was $3 $8 million compared to $12000 in the prior year quarter, including the cash impact of capitalized costs free cash flow was approximately.

Isabelle: Non-GAAP net loss attributable to Braze shareholders in the quarter was $3.5 million, or a loss of $0.04 per share, compared to a loss of $13.7 million, or a loss of $0.14 per share, in the prior year quarter. Now turning to the balance sheet and cash list. We ended the quarter with $480 million in cash, cash equivalents, restricted cash, and marketable security. Cash provided by operations during the quarter was $3.8 million, compared to $12,000 in the prior year quarter.

Isabelle: Negative $3 $5 million compared to negative free cash flow of $1 $9 million in the prior year quarter. As we have stated before we expect our free cash flow to fluctuate from quarter to quarter, given the timing of customer and vendor payments.

Isabelle: And now turning to our forecast we continue to see solid interest in high quality customer engagement solutions, particularly from existing customers, while macroeconomic headwinds persist and we continue to face constrained marketing budgets and slower new business growth levels of volatility and uncertainty have declined as we our customers and our prospects have learned to better NAV.

Isabelle: Including the cash impact of capitalized costs, free cash flow was approximately negative $3.5 million compared to negative $1.9 million in the prior year quarter. As we have stated before, we expect our free cash flow to fluctuate from quarter to quarter given the timing of customer and vendor purchases. And now, turning to our 4K. We continue to see solid interest in high-quality customer engagement solutions, particularly from existing customers. While macroeconomic headwinds persist and we continue to face constrained marketing budgets and slower new business growth, levels of volatility and uncertainty have declined as we, our customers, and our prospects have learned to better navigate this environment. As always, we approach our guidance with a prudent and risk-adjusted methodology and assume current macroeconomic conditions persist over the forecast horizon.

Isabelle: The gate this environment.

Isabelle: As always we approach our guidance with a prudent and risk adjusted methodology and assume current macroeconomic conditions persist over the forecast horizon.

Isabelle: For the first quarter of fiscal 2025, we expect revenue to be in the range of $131 million to $132 million, which represents a year over year growth rate of approximately 29% at the midpoint, while we have not traditionally guided to gross margin beyond our long term range of 67% to 72% as I. Just noted we have seen increased adoption of prime.

Isabelle: Messaging channels, including Whatsapp, which will likely result in a first quarter non-GAAP gross margin that is at the low end of our long term range for the full year, we expect our non-GAAP gross margin to be within our long term range with sequentially improving gross margins throughout the year first quarter non-GAAP operating loss is expected to be in the range of 13 million to 14 million.

Isabelle: For the first quarter of fiscal 2025, we expect revenue to be in the range of $131 to $132 million, which represents a year-over-year growth rate of approximately 29% at the end of the fiscal year. While we have not traditionally guided to gross margin beyond our long-term range of 67 to 72 percent, as I just noted, we have seen increased adoption of premium messaging channels, including WhatsApp, which will likely result in a first-quarter non-gap gross margin that is at the low end of our long-term range. For the full year, we expect our non-GAAP gross margin to be within our long-term range with sequentially improving gross margins throughout the year. The first quarter non-gap operating loss is expected to be in the range of $13 million to $14 million.

Isabelle: At the midpoint this implies an operating margin of approximately negative 10%.

Isabelle: First quarter non-GAAP net loss is expected to be $10 million to $11 million and first quarter non-GAAP net loss per share in the range of 10 to 11 cents per share based on approximately 99.5 million weighted average basic shares outstanding during the period for the full fiscal year 2025, we expect total revenue to be in the range of 570 million to 575 million.

Isabelle: Which represents a year over year growth rate of approximately 21, 5% at the midpoint fiscal year 2025, non-GAAP operating loss is expected to be in the range of 20 million to $24 million at the midpoint. This implies a non-GAAP operating margin of approximately negative, 4% or a 450 basis point improvement versus fiscal year.

Isabelle: 2020 for non.

Isabelle: non-GAAP net loss for the same period is expected to be in the range of 8 million to $12 million for fiscal year 2025, non-GAAP net loss per share is expected to be eight to 12 cents per share based on a full year weighted average basic share count of approximately 101 million shares.

Isabelle: At the midpoint, this implies an operating margin of approximately negative 10 percent. First quarter non-gap net loss is expected to be $10 to $11 million, and first quarter non-gap net loss per share in the range of $0.10 to $0.11 per share, based on approximately 99.5 million weighted average basic shares outstanding during the period. For the full fiscal year 2025, we expect total revenue to be in the range of $570 million to $575 million, which represents a year-over-year growth rate of approximately 21.5 percent. Fiscal year 2025 non-GAAP operating loss is expected to be in the range of $20 million to $24 million. At the midpoint, this implies a non-GAAP operating margin of approximately negative 4%, or a 450 basis point improvement versus fiscal Non-Gap Net Loss for the same period is expected to be in the range of $8 million to $12 million. For fiscal year 2025, a non-gap net loss per share is expected.

Isabelle: We remain on track to achieve positive quarterly non-GAAP operating income and positive free cash flow by Q4 of this fiscal year.

Isabelle: I'll close by reiterating our excitement embraces future we remain focused on partnering with our customers to deliver best in class customer engagement solutions and driving product innovation, while consistently executing against our financial targets. We remain confident in our ability to grow revenue, while maintaining cost discipline and delivering on the financial targets that we have set.

None: For fiscal 2025, and with that we'll now open the call for questions. Operator, please begin the Q&A.

None: We will now begin the Q&A session, if you'd like to ask a question. Please use the raise hand feature at the bottom of your screen window.

None: One moment barbecue assembles.

None: Our first question comes from Arjun Bhatia from William Blair. Your line is open feel free to a niche.

None: Perfect.

Arjun Rohit Bhatia: Congrats on the strong and for the year.

Some exciting capabilities.

Arjun Rohit Bhatia: From an AI perspective.

None: Let's touch a little bit.

None: What prep work.

None: And customers might need to do before they can leverage some of them did add capabilities introduced firms from sage like what what needs to be done from a governance of data prep perspective.

Arjun Rohit Bhatia: 8 to 12 cents per share, based on a full year weighted average basic share count of approximately $101 million. We remain on track to achieve positive quarterly non-GAAP operating income and positive free cash flow by Q4 of this fiscal year. I'll close by reiterating our excitement for Braze. We remain focused on partnering with our customers to deliver best-in-class customer engagement solutions and driving product innovation while consistently executing against our financial targets. We remain confident in our ability to grow revenue while maintaining cost efficiency and delivering on the financial targets that we have set for fiscal 2020. And with that, we'll now open the call for questions. Operator, please begin the Q&A session. If you would like to ask a question, please use the raise your hand feature at the bottom of your Zoom window. I will wait one moment while the QS... Our first question comes from Arjun Bhatia from William Blair. Your line is open.

None: And it might vary by product, but I'm, just curious how long that might take in what we're doing to help our customer better.

None: Yeah. Thanks for the question. So we're continuing to invest in AI across the entire product service area and I hope that the four recent releases that I highlighted earlier helped to demonstrate that you're seeing a mix of machine learning techniques multiple ways of using gen AI and it's being integrated throughout our Sac and so as you alluded to it definitely depends on the feature.

None: But we continue to work in a couple of different categories. The first one and I've mentioned this before is that copilot vision, where we want using AI embrace to make it feel less like you're using a tool and more like youre working with a whole team of specialists consultants to help you tackle your customer engagement challenges and those are things like tone control that I mentioned earlier as well as some of the helpers that.

None: We have to help people write code or scripting in some of the more technical parts of the product and just generally the journey I integrations. Those I'll just work immediately out of the box no setup from the customer and the entire purpose of them is to improve marketer productivity and allow for them to.

Bill: Perfect. Thank you, guys. And congrats on the strong end of the year. Some exciting capabilities from an AI perspective. Bill, I was curious if you could just touch a little bit on what prep work, if any, customers might need to do before they can leverage some of these AI capabilities that you've introduced from Sage. What needs to be done from a governance, data prep perspective? And it might vary by product.

None: Operator in a quicker manner with more agility and be able to take advantage of more of our products something like the AI recommendations that I mentioned that does require a bit more setup, but as you heard in the customer example that I shared in the prepared remarks, we've all done a lot of work to be able to improve the time to value there and streamlined that setup. So in that example, it actually.

Bill: I'm just curious how long that might take and what you're doing to help your customer experience. Yeah, thanks for the question. So we're continuing to invest in AI across the entire product service area. And I hope that the four recent releases that I highlighted earlier helped to demonstrate that. You're seeing a mix of machine learning techniques, multiple ways of using Gen AI, and it's being integrated throughout our stack.

None: Builds on top of two separate products, both of which we independently monetize so our product catalog feature is used for a variety of different.

Content capabilities within canvas and then the item recommendations capability, which uses transformers to be able to provide even better recommendations and more content personalization sits on top of that and those product catalogs can actually be built up through our cloud data ingestion capability, which means that the marketer with simple configuration can be automatically.

Bill: And, as you alluded to, it definitely depends on the feature, but we continue to work in a couple different categories. You know, the first one, and I mentioned this before, is that co-pilot vision where we want AI and Braze to make it feel less like you're using a tool and more like you're working with a whole team of specialists, consultants to help you tackle your customer engagement challenges. And those are things like tone control, which I mentioned earlier, as well as some of the helpers that we have to help people write code or script in some of the more And just generally, the Gen AI integrations, those all just work immediately out of the box, with no setup from the customer. And the entire purpose of them is to improve marketer productivity and allow them to operate in a quicker manner with more agility and be able to take advantage of more of our products. Something like the AI recommendations that I mentioned, you know, that do require a bit more setup.

None: Loading in all of the content from the product catalog directly out of a data warehouse like snowflake.

None: Bringing that into <unk> and then the item recommendations are similarly, just clicks and simple configuration with Embraer to then pull that into the content of any message channel and so it is a place where they need to have their product catalog data clean, but many customers already have that and the ability to interconnect that have something like cloud data ingestion be able.

None: Automatically run all of the T cells with no operational burdened by the customer and then have item recommendation sit on top of that and be available in every single channel I think its just a great example, where you know that is something which has a lot of moving parts to it but because of the way that we vertically integrated the capabilities and the Braves stack, we are taking on the burden of managing the vast majority.

Bill: But as you heard in the customer example that I shared in the prepared remarks, we've all done a lot of work to be able to improve the time to value there and streamline that setup. So in that example, it actually builds on top of two separate products, both of which we independently monetize. And so our product catalogs feature is used for a variety of different content capabilities within Canvas.

None: Any of those moving parts and we are therefore elevating the job of the market are up to that of connecting their business strategy to the customer journey and making sure that they are orchestrating and.

Bill: And then the item recommendations capability, which uses transformers to be able to provide even better recommendations and more content personalization, sits on top of that. And those product catalogs can actually be built up through our cloud data ingestion capability, which means that, with simple configuration, the marketer can be automatically loading all of the content from the product catalog directly out of a data warehouse like Snowflake, bringing that into Braze. And then the item recommendations are similarly just, you know, clicks and simple configuration within Braze to then pull that into the content of any message channel.

None: Prioritizing their own goals in a way that's going to drive relevance for the customer and create value for their business.

None: Perfect.

None: Super helpful and Wonder if I can just on the demand environment as you see it I think.

None: Thank you called out a wholesale.

None: Some of our wins in the fourth quarter somewhere traditional enterprise somewhere.

None: Can you talk a little bit about where youre seeing demand differences if any between those two groups as you think about this year and go to market allocations.

None: Is there any between those two is there any one where you might lean heavier or might see stronger demand relative to the other.

None: Yeah. So I think that we're seeing similar trends that you're hearing about elsewhere, which is that there's relative strength in the enterprise as compared to the commercial segment I think there we're seeing relatively similar demand environments globally. When we look out from geography to geography, and similarly relatively similar across verticals. So most of the most of the differentiation that we see.

Bill: And so it is a place where, you know, they need to have their product catalog data clean, but many customers already have that. And the ability to interconnect that, have something like cloud data ingestion, be able to automatically run all of the ETLs with no operational burden by the customer, and then have item recommendations sit on top of that and be available in every single channel. I think it's just a great example where, you know, that has a lot of moving parts to it, but because of the way that we vertically integrated the capabilities in the Braze stack, we are taking on the burden of managing the vast majority of those moving parts. And we are therefore elevating the job of the marketer up to that of connecting their business strategy to the customer journey and making sure that they are orchestrating and prioritizing their own goals in Perfect. That's super helpful.

None: C tends to be correlated with company size that is certainly going to play into our go to market investment strategy, but a lot of that resourcing. Those resourcing decisions were already made earlier this year. When we had declining sales capacity over last year and we are now after the first Simon over 12 months, increasing our sales capacity and hiring new people.

None: Into that team, we're doing that broadly across different categories and in different geographies, where we are able to where we're seeing opportunities to meet.

None: Incremental demand, but that's coming off of a baseline where we did reorient those go to market our resources across the commercial and enterprise segments last year to be able to match, what we continue to see persisting, which is relative strength in the enterprise versus the SMB. So when you sum all that up we are seeing participation rates increasing in our sales team I mentioned that we've been very happy with.

Bill: And one, if I can just on the demand environment, as you see it, I think you called out a host of customer wins in the fourth quarter, some were traditional enterprises, some were more digital motives. Can you talk a little bit about where you're seeing demand differences, if any, between those two groups? And as you think about this year and go to market allocations, is there any difference between those two? Is there any one where you might lean heavier or might see stronger demand relative to the other?

Bill: Yeah, so I think that we're seeing similar trends that you're hearing about elsewhere, which is that there's relative strength in the enterprise as compared to the commercial segment. I think that we're seeing relatively similar demand environments globally when we look out from geography to geography, and similarly, relatively similar across verticals. So, most of the differentiation that we see tends to be correlated with company size. That is certainly going to play into our go-to-market investment strategy, but a lot of those resourcing decisions were already made earlier this year when we had declining sales capacity last year. We are now, for the first time in over 12 months, increasing our sales capacity and hiring new people into that team. We're doing that broadly across different categories and in different geographies where we're seeing opportunities to meet incremental demand, but that's coming off of a baseline where we did reorient those go-to-market resources across the commercial and enterprise segments last year to be able to match what we continue to see persisting, which is relative strength in the enterprise versus S&B.

None: Execution of the sales team in particular in the second half of the year and that is why we are we are at the point now where we are investing in adding additional sales capacity for the first time in over a year and we're excited about that.

None: Okay. Appreciate the color. Thank you.

None: Our next question comes from DJ Hynes from Canaccord. Please limit your audio and ask your question.

David E. Hynes: Hey, Thanks, guys.

David E. Hynes: Echo origin is congrats on the quarter.

David E. Hynes: Bill maybe one for you so look obviously.

David E. Hynes: You spoke to.

David E. Hynes: Taking share from legacy marketing clouds, but we're seeing a lot of AI innovation from the platform firms right I mean salesforce spoke to.

David E. Hynes: Cloud revenue largely being attributable to their marketing cloud are you seeing any signs that.

David E. Hynes: The velocity of re platforming opportunities is slowing at all as customers, maybe contemplate like hey, I'll stick with Adobe or salesforce whoever for a little bit longer to see it.

David E. Hynes: Hey, I can make a difference or is there any discernible change just as those firms continue to kind of tell the story around AI.

David E. Hynes: I don't think that we're seeing much of a change there you know that story of hey hold on there's one more thing coming in a little while you know right now that the new flavor of the month for them as Jenny I, but we've seen that as an incumbent advantage that works against that transition from the legacy tools into a place like braced for gears now.

Bill: So, when you add up all that, we are seeing participation rates increase in our sales team. I mentioned that we've been very happy with the execution of the sales team, in particular in the second half of the year, and that is why we are at the point now where we are investing in adding additional sales capacity for the first time in over a year, and we're excited about that. Awesome. I appreciate all the color.

David E. Hynes: So it doesn't over the long term it doesn't really feel materially different and I think you know the legacy marketing clouds, even as they're working to put in place. Some of these gen. AI features that are either going to help with marketing marketer productivity or some of the some of the work that salesforce has been doing they were still fundamentally built in a world where you know they assume they.

David E. Hynes: Thank you. Our next question comes from D.J. Hynes from Canaccord.

David E. Hynes: Please unmute your audio and ask, Hey, thanks, guys. And I'll echo Arjun's congrats on the quarter. Phil, maybe one for you.

Bill: So look, obviously, you spoke of taking share from legacy marketing clouds, but we're seeing a lot of AI innovation from the platform firms, right? I mean, Salesforce spoke of data cloud revenue, largely being attributable to their marketing cloud. Are you seeing any signs that the velocity of re-platforming opportunities is slowing at all as customers maybe contemplate like, hey, I'll stick with Adobe or Salesforce, whoever, for a little bit longer to see if AI can make a difference? Or is there any discernible change just as those firms continue to kind of tout the story around AI? No, I don't think that we're seeing much of a change there. You know, that story of, hey, hold on, there's one more thing coming in a little while. You know, right now, the new flavor of the month for them is Gen AI. But, you know, we've seen that as an incumbent advantage that works against the transition from the legacy tools into a place like Braze for years now. And so, over the long term, it doesn't really feel materially different.

David E. Hynes: We're in control of the customer journey, the touch points with the customer were relatively linear they didn't demand the same level of real time or interactivity. They were single threaded its built into the foundations of how they process data how they make sense of it how they dispatch messaging and you continue to see that those things that are in their foundations, they can't fix without their own re platforming.

David E. Hynes: So even as they continue to try to make acquisitions and bolt yet more things together you know if anything I think that it continues to work against them is it increases the amount of complexity that they have and the way that they were originally architected may have been appropriate for the pre mobile world, where most email was read on your desktop at work, but modern consumers are always on the interact with brands on there.

David E. Hynes: [noise] terms there on non linear customer journeys, they have an ever expanding collection of mediums and channels that they want to be communicated with them that they want to use when they're accessing your products and services and I think it's really important to grapple with that fundamental reality and the foundation of your products. We've embraced the fact that we're a companion to the customer journey, we carefully listen across all the touch points, we're working to deeply.

Bill: And I think, you know, the legacy marketing clouds, even as they're working to put in place some of these Gen AI features that are either going to help with marketing, marketer productivity, or, you know, some of the work that Salesforce has been doing, they were still fundamentally built in a world where they assumed they were in control of the customer journey. The touchpoints with the customer were relatively linear. They didn't demand the same level of real-time or interactivity. They were single-threaded.

David E. Hynes: We understand the customer and the context that surrounds them and then we're leveraging that understanding to help shape the outcomes to achieve the brand schools and those goals are.

Bill: It's built into the foundations of how they process data, how they make sense of it, how they dispatch messaging. And you continue to see that those things that are in their foundations, they can't fix without their own replatforming. So even as they continue to try to make acquisitions and bolt yet more things together, you know, if anything, I think that it continues to work against them as it increases the amount of complexity that they have. And the way that they were originally architected may have been appropriate for the pre-mobile world, where most email was right on your desktop at work.

David E. Hynes: I spoke about this a little bit.

David E. Hynes: A bit ago that we want the marketers to be able to have complexity controlled for them to the extent possible. So that they can be operating in a more strategic level. They can be really connecting themselves. So what the customers journey looks like and feels like so that they can take their own brand of their own company's goals and attach those to the customer journey and be able to shape. It in a way that's more.

Bill: But, you know, modern consumers are always on. They interact with brands on their terms. They're on non-linear customer journeys. They have an ever-expanding collection of mediums and channels that they want to be communicated with and that they want to use when they're accessing your products and services.

David E. Hynes: Positive for them, whether that's incentivizing advocacy avoiding churn, it's helping build loyalty or drive purchases or even just educating their customer and making sure. They know theres a steady hand alongside them during their product and service journey. You know these are all use cases that Braves fulfills an end in the modern customer engagement environment. They all demand that these foundations are.

Bill: And I think it's really important to grapple with that fundamental reality and the foundation of your product. You know, we've embraced the fact that we're a companion on the customer journey. We carefully listen across all the touchpoints.

David E. Hynes: To be event driven in real time that they can accommodate the non linear customer journey and really engage with them on their terms as a companion.

Bill: We're working to deeply understand the customer and the context that surrounds them, and then we're leveraging that understanding to help shape outcomes to achieve the brand's goals. And, you know, those goals are, I spoke about this a little bit ago, that we want marketers to be able to have complexity controlled for them to the extent possible, so that they can be operating at a more strategic level. They can be really connecting themselves to what the customer's journey looks like and feels like, so that they can take their own brand, their own company's goals, and attach those to the customer journey and be able to shape it You know, whether that's incentivizing advocacy, avoiding churn, helping build loyalty or drive purchases, or even just educating their customers and making sure they know there's a steady hand alongside them during their product and service journey.

None: Yes that makes a ton of sense and it's helpful color as well maybe I can follow up one on the numbers for user like very very rough math.

None: This year half of your growth came from the installed base half from net new right at 33% growth 117% NRI.

None: As we look to fiscal 'twenty five like how does that growth matrix feel to you as you contemplate what's in the guide like how much from that new how much from the base.

None: Yeah. So we still generally try to keep that sort of 50 50, and actually we're always sort of trying to index on more than 50% coming from the the net new and so you know when I talk about that dollar based net retention I not yet having hit the bottom some of that is by virtue of you know trying to index all that more to that.

None: Net new so I don't actually think we've fully hit the bottom on that number just in case I get that question and I and so that's how we think of the Max is trying to to continue to index all that more <unk> towards than that now.

Bill: You know, these are all use cases that, you know, Braze fulfills. And in the modern customer engagement environment, they all demand that these foundations are able to be event-driven in real time, that they can accommodate the non-linear customer journey and really engage with them on their terms as a companion. Yeah, yeah, makes a ton of sense. It's helpful color is, well, maybe I could follow up one of the numbers for

None: Perfect. Thank you guys.

None: Our next question comes from Ryan Macwilliams from Barclays. Please on mute and ask your question.

Hey, guys. Thanks, a question for Bill I know the focus is on the largest customers from the legacy marketing clubs, but have you noticed any changes in the competitive environment or against your by the customer engagement competitors like have you seen more wins, he most competitors and I only ask because it may be harder for them to invest in something.

Isabelle: So like, very, very rough math, you know, this year, half of your growth came from the installed base, half from net new, right? You have 33% growth, 117% NRR. As we look to fiscal 25, how does that growth matrix feel to you as you contemplate what's in the guide? Like, how much from that new, how much from the base?

None: These new capabilities and features that you guys are going out.

None: Thanks.

Bill: Yeah, I mean, I think we continue to broadly experience our competition in the two major segmentation that I spoke about before with legacy marketing clouds. The high end of the market and the collection of startups that vary by vertical or geography in the mid market and low and we continue to only see sporadic competition from the start upset in the enterprise and most of the startup competitors I think are also operating below.

Isabelle: Yeah, so we still generally try to keep that sort of 50-50, and actually, we're always sort of trying to index on more than 50% coming from the net new. And so, you know, when I talk about that dollar-based net retention not yet having hit the bottom, some of that is by virtue of, you know, trying to index a little bit more to that net new. So I don't actually think we've fully hit the bottom on that number, just in case I get that question. And so that's how we think of the mix, trying to continue to index a little bit more towards the net new. Perfect.

Bill: Our pricing floor, which remains in the 20 to 30 K range when I think about the R&D burden that's been placed on the private startups in particular, especially those that I haven't been hiring for quite a while as they have been trying to get themselves IPO ready.

Ryan Patrick MacWilliams: Thank you, guys. Our next question comes from Ryan MacWilliams from Barclays. Please unmute and ask... Hey guys, thanks for the question.

It's definitely a parent that product velocity from for many of them has slowed down and I think that you know I I.

Bill: For Bill, I know a lot of the focus is on the largest customers from the legacy marketing clouds. But have you noticed any changes in the competitive environment against your private customer engagement competitors? Like, have you seen more wins from those competitors?

I think that's fair to say, it's not just the AI and machine learning features that are difficult for them to build are keeping up with the continued advance of channels and the adoption that marketers want to make is there are new opportunities and new ways to be communicating with customers I'm keeping up on the rapidly changing data science universe, and the kind of data warehousing.

Bill: And I only ask because it may be harder for them to invest in some of these new AI capabilities and features that you guys are coming out with. Thanks. Yeah, I mean, I think we continue to broadly experience our competition in the two major segmentations that I've spoken about before, with legacy marketing clouds at the high end of the market and the collection of startups that vary by vertical or geography in the mid-market and low-end. We continue to only see sporadic competition from the startup set in the enterprise.

Bill: [noise] universe, as well Theres, a theres a lot required in order to keep up with this space right now and I think it is something that I'd product velocity and the agility of the R&D teams is going to be really important as we continue to build down the stretch here.

Isabelle: And most of the startup competitors, I think, are also operating below our pricing floor, which remains in the $20K to $30K range. When I think about the R&D burden that's been placed on private startups in particular, especially those that haven't been hiring for quite a while as they've been trying to get themselves IPO ready, it's definitely apparent that product velocity for many of them has slowed down. And I think it's fair to say it's not just the AI and machine learning features that are difficult for them to build, keeping up with the continued advance of channels and the adoption that marketers want to make as there are new opportunities and new ways to be communicating with customers, keeping up with the rapidly changing data science universe and the data warehousing universe as well.

None: I appreciate the color there and then for Israel.

None: Historically has been prudent with your initial revenue guidance for the year just to double click on that is there any changes to guidance philosophy. This year and are we largely through like the Covid era renewals of some customers that were maybe more optimistic in their growth projections two years ago, or maybe theres still some of that let's start.

None: Thanks, Yeah. Thanks for the question. So the first on the overall guide so look the macro continues to be challenging it's not deteriorating, but it's certainly not improving.

None: We're still seeing customers exhibit overall price sensitivity there they're buying as we've said over last couple of quarters, continuing to buy for their new needs rather than growth.

None: And that said, we've actually learned to kind of adapt to this environment and so are our customers and prospects. So we do expect a little bit less volatility in our results versus last year and so we haven't really changed our guidance philosophy, but I'd say the environment in the context around us has to be considered them. So we'll continue to take that risk.

Isabelle: There's a lot required in order to keep up with this space right now, and I think it is something that product velocity and the agility of the R&D teams are going to be really important as we continue to build down the stretch here. And then for Isabelle, Braze historically has been prudent with your initial revenue guidance for the year. Just to double-click on that, are there any changes to guidance philosophy this year? And are we largely through with the COVID era renewals of some customers that were maybe more optimistic in their growth projections two years ago? Or maybe there's still some of that left to start in 2024?

None: Adjusted approach, but we feel good about the guidance that we've set forth for the year and sorry your follow up question on that.

None: And just like Oh, no renewals from two years ago. So it's not so much the COVID-19 piece, specifically, but there was sort of the follow up dynamic where customers were just generally exhibiting a desire to sort of buy for the current environment and so even in upsells and that manifests itself in the dollar based net retention is.

Isabelle: Thanks. Thanks for the question. So first on the overall guide, so look, macro continues to be challenging. It's not deteriorating, but it's certainly not improving.

Isabelle: We're still seeing customers exhibit overall price sensitivity. They're buying, as we've said over the last couple of quarters, continuing to buy for their known needs rather than growth. And that said, we've actually learned to kind of adapt to this environment, and so have our customers and prospects. So we do expect a little bit less volatility in our results versus last year. So we haven't really changed our guidance philosophy, but I'd say the environment and the context around us have to be considered. So we'll continue to take that risk-adjusted approach, but we feel good about the guidance that we've set forth for the year. And sorry, your follow-up question on that.

None: Well, the upsells are really priced or or sized more for what they need and in the immediate term as opposed to buying for growth. So it's not so much there there is still a bit of the prior contracts that are working themselves out where we're through a lot of that but the dynamic itself continues only because the ups.

None: L. P says are also now representative of buying for what they need as opposed to buying for future growth.

None: That makes sense. Thank you.

None: Our next question comes from Gabriela Borges from Goldman Sachs. Please on mute and ask your question Catherine Thank you.

Isabelle: It's not so much the COVID piece specifically, but there was sort of the follow-up dynamic where customers were just generally exhibiting a desire to sort of buy for the current environment. And so even in upsells, and that manifests itself in the dollar-based net retention as well, the upsells are really priced or sized more for what they need in the immediate term as opposed to buying for growth. So it's not so much; there is still a bit of the prior contracts that are working themselves out. We're through a lot of that, but the dynamic itself continues only because the upsell pieces are also now representative of buying for what they need as opposed to buying for future growth. That makes sense. I appreciate the color.

Gabriela Borges: Remember recently I kind of listen maybe a year or two ago when U unbundled email and now as the catalysts are helping with the legacy displacements I'm curious when you hear from your sales team today, one of them like what are the factors that are within your control.

Oh, I didn't maybe pulled the lever a little bit more on some of those legacy replacements. What are the sticking point, which I was still with no control of it you could may be pushed a little harder on thanks.

None: Yeah, Great question, I think that one of the major ones that has kept a lot of people in legacy players is also the services ecosystem, which is we're talking about a little bit you know one of the one of the things we've been talking about the last few quarters. It's just how pleased we are with our success across the global systems integrators and the large major.

Gabriela Borges: Thank you. Our next question comes from Gabriela Borges from Goldman Sachs. Please unmute and ask... Good afternoon. Thank you. Bill, I recently remembered. I think it was maybe a year or two ago when you unbundled email.

Bill: And that was the catalyst for helping with the legacy displacements. I'm curious when you hear from your sales team today, what are the like factors that are within your control that allow you to maybe pull the lever a little bit more on some of the legacy replacements? What are the sticking points that are still within your control that you could maybe push a little harder on?

None: On marketing agency holding companies and we continue to really build out the braes enabled services ecosystem around the world and in all different kind of levels for customers and so one of the things that definitely has gotten in the way of some of those.

Bill: Thanks. Yeah, a great question. I think that one of the major ones that has kept a lot of people in legacy players is also the services ecosystem, which is worth talking about a little bit. You know, one of the things we've been talking about the last few quarters is just how pleased we are with our success across the global systems integrators and the large major, and marketing agency holding companies. And we continue to really build out the Braze-enabled services ecosystem around the world and at all different kinds of levels for customers. And so one of the things that definitely has gotten in the way of some of those, And so I think that a key component of that, especially for some aspects of the early majority, definitely when you get into the late majority of those transitions, that pairing that up with the services ecosystem has been really important.

None: Migrations in the past has been the heavy lift of moving from a platform that you've maybe been on for five or 10 years as well as the requirement to move into what is ultimately a new paradigm in a new way of modeling your data and new way of thinking about how you instrument in and how you measure performance and such as you move into <unk> and so I think that a key component of that.

None: That especially for some of the some aspects of the early majority definitely when you get into the late majority of those transitions that are pairing that up with services ecosystem has been really important and I think that we're continuing to see the tide shift away from that being a large legacy marketing cloud incumbent advantage to one where there's a lotta eagerness to get involved.

Bill: And I think that we're continuing to see the tide shift away from that being a large legacy marketing cloud incumbent advantage to one where there's a lot of eagerness to get involved in the new wave that Braze is really representing as we grow into the enterprise. From a product perspective, we've always had a portion of our R&D dedicated to enterprise-specific features and capabilities. Some of these things around approvals, workflows, compliance, and security, as well as just data management and governance and things like that.

None: In the new wave that Braves is really representing as we're growing into the enterprise from a product perspective, we've always had a a portion of our R&D dedicated to enterprise specific features and capabilities. Some of these things around approvals workflows and compliance and security as well as just data management and governance and things like that.

Bill: And you're continuing to see our roadmap accommodate those. We did build out more approvals, and workflow capabilities through the back half of last year. And we've obviously continuously been improving our own data governance capability. Things like cloud data ingestion, which I mentioned earlier, are definitely more infosec friendly in various ways because it allows for the customer to keep a lot of their data in their data warehouse.

None: And you're continuing to see our roadmap accommodate those you know we did build out I'd more approvals workflow capabilities through the back half of last year, we've obviously continuously that improving our own data governance capability things like cloud data ingestion that I mentioned earlier, our I'm definitely more info SEC friendly in various ways because it allows for the customer to keep a lot of their data in their data warehouse.

Bill: And so those are all things that are certainly supportive of smoothing the path to be able to get those enterprise transformations going, and they all work together, I think, in our favor. And that's a big part of why we're seeing acceleration.

None: And so you know those are all things that are certainly supportive of smoothing the path to be able to get those enterprise transformations going and they all work together I think in our favor and that's why we're that's a big part of why we're seeing acceleration.

None: Yeah that all makes sense. Thank you and the follow up is on the S&P ecosystem and then of course you kill you made a couple of comments last quarter on the technology back I guess so my question. Here is do you think that's a scenario where we've seen mean reversion over other questions to gear up and then maybe if it is about how do we think about that.

Gabriela Borges: And the follow-up is on the SMB ecosystem. And in particular, you made a couple of comments last quarter on the technology backlog ecosystem. So my question here is, Do you think that there is a scenario where we see mean reversion over the course of the year?

Bill: And then maybe for Isabelle, how do we think about the implications of that for new logo growth? Is there a scenario where we could see more of an improvement over the course of the year? Yeah, so on the new logo growth, you know, one of the things that you're seeing in the dynamic of the logo growth this quarter is that it's not – we were very successful in our upsell motion in Q4. And when you do an upsell, you can absolutely do upsells where there are new contracts that are being signed with an existing parent company. So because of the way we define the customer count, what you're missing is sort of the number of net new order forms that are actually being printed.

None: Implications of that I need to look at this last night, when we could see more of an improvement of other questions here.

None: Yeah. So on the on the new logo growth you know one of the things that you're seeing in the dynamic of our of the logo growth. This that this quarter is it's not that we had we were very successful in our upsell motion in Q4, and when you do an upsell you can absolutely do upsells, where theres new contracts that are being signed with an existing parent company. So because of the way we did.

None: Fine.

None: The customer account, what you're missing is sort of the number of net new order forms that are actually being printed and actually when I looked over time at the number of order forms that have been printed are signed within a quarter. There was no material deterioration in Q4 I'm at all so so I think what we're seeing in terms of like the logo.

Isabelle: And actually, when I've looked over time at the number of order forms that have been printed or signed within a quarter, there was no material deterioration in Q4 at all. So I think what we're seeing in terms of like the logo count right now is really just a bit of a shift towards upsell versus net new. I think on the SMB piece, there is still good momentum with new SMBs. What you're seeing, though, is also one, the fact that a lot of this is happening at the ultimate parent level, so you're not seeing the net new, but also, with SMBs, we're still seeing levels of logo churn that are working against us.

None: Right now, it's really just a bit of a shift towards upsell versus net new.

None: I think on on the S. M. D piece, we there is still.

None: Good momentum with new F N b, what you're seeing though is also one the fact that a lot of this is happening in AR at the ultimate parent level. So you're not seeing the net new but also with the SMB. We're still seeing levels of logo churn that are working against US now. These are much smaller accounts, which is why you're seeing the dollar based net retention.

Isabelle: Now, these are much smaller accounts, which is why you're seeing the dollar-based net retention continue to hold up. But there is logo churn that we're working against as well. That's what we'll call it.

None: <unk> continue to hold up but there is logo churn that that that were working against as well.

None: That's helpful color. Thank you.

None: Our next question comes from pendulum Laura from J P. Morgan Please limit your audio and ask your question.

Isabelle: Thank you. Our next question comes from Pinjalim Bora from J.P. Morgan. Please unmute your audio and ask, " Great. Thank you so much. A couple of questions for Isabelle.

Laura: Great. Thank you so much a couple of questions for Isabelle.

Laura: Can you talk about the investments going into fiscal 'twenty, five I think bill said.

Talked about sales capacity is that 100% of the incremental investments are or is there anything else that the incremental dollar is going to us and then a follow up on India.

Pinjalim Bora: Can you talk about the investments going into fiscal 25? I think Bill said he talked about sales capacity. Is that 100% of the incremental investments? Or is there anything else that the incremental dollar is going on? And then a follow-up on NDR. It sounds like it has not bottomed at this point. Where do you expect NDR to bottom?

Isabelle: It sounds like it is not bottomed at this point.

Isabelle: Where do you expect that NDA.

Isabelle: Bottom I mean, if I look at the guidance when you, 1% and if you kind of maintain that 50 50 between expansions and new logo good India continued to grow.

Isabelle: Low double digit is that what is baked into the guidance at this point.

None: Yeah. So I'll take the MTR question first so I I've said pretty consistently that you know I think there's I've used the term historically more air to come out of the balloon and what we're very pleased with the results that happened in Q4, and what you saw was actually moderation in the reduction in that number sequentially. So historic over the last couple of quarters, it's dropped about 2%.

Isabelle: I mean, if I look at the guidance of 21%, and if you kind of maintain that 50-50 between expansions and new, could NDR continue to go towards low double digits, is that? Yeah, so I'll take the NDR question first. So I've said pretty consistently that, you know, I think there's, I've used the term historically, more air to come out of the balloon. We are very pleased with the results that happened in Q4, and what you saw was actually moderation in the reduction in that number sequentially. So historically, over the last couple quarters, it's dropped about 2% sequentially; this quarter, it dropped 1% sequentially. So I think there are definitely facts patterns that are working in our favor to help that stabilize. But I'm not calling the bottom on this; we don't guide on it.

None: Sequentially this quarter it dropped 1% sequentially.

None: So I think there are definitely fact patterns that are working in our favor to help that stabilize them, but I'm not calling the bottom on this we don't guide on it.

None: And I do think in the context of the scenario for our guidance I would assume that that number continues to tick down and then with respect to overall investment in the year were broadly investing in R&D right now, we're investing in marketing and across go to market as well as in building sales capacity and we're excited to be doing that.

None: Where we see a lot of great opportunities for continued revenue growth as we build out and monetize new products. You may have seen our rebrand that we launched a little bit earlier. This year, we've been really excited to be doing some of our some of our first major out of home that we've ever done before in order to help build awareness and visibility for the new brand in particular and we're excited about the work.

None: But that's been doing is we've been attending more events around the world and so there's a lot happening at the kind of the top in the middle of the funnel as well and in addition to building sales capacity and continuing to invest in R&D. You may have also seen that our international expansion has continued as we've opened new locations in Bucharest in Romania, Our Bucharest, Romania in so Paulo and <unk>.

Isabelle: And I do think in the context of the scenario for guidance, I would assume that that number continues to tick down. And then, with respect to overall investment for the year, you know, we're broadly investing in R&D right now, we're investing in marketing and across go-to-market as well as in building sales capacity, and we're excited to be doing that. especially after the successful acquisition of North Star last year, which has given us a very firm foothold in the ANZ market. Thank you. Our next question comes from Scott Berg at Niedermann Company. Please unmute and ask him. Hi everyone.

None: Zale as well as in Seoul in Korea, I and you know, we're going to continue to invest in building out our international.

None: Our presence, especially after the successful ingestion of the Northstar acquisition last year, which has given us a extremely firm foothold in the ANZ market.

None: Thank you.

None: Our next question comes from Scott Berg at Needham <unk> Company. Please on mute and ask a question.

Scott Randolph Berg: Thanks for taking my questions. Congratulations on a great quarter. Bill, you mentioned you signed the company's first eight-figure customer in the quarter, mainly through what looks like some customer expansions. But what does an eight-figure customer look like to Braze? Is it heavy on one channel?

Scott Randolph Berg: Hi, everyone and thanks for taking my questions Congrats on a great quarter.

Scott Randolph Berg: Bill You mentioned you signed the company's first eight figure customers in the quarter, mainly through six customer expansions, but what is an eight figure customers look like to phrase that heavy on one channels in a multichannel type strategy.

Bill: Is it a multi-channel type strategy? How should we think about that type of deal? Yeah, so it's a multiple across a bunch of dimensions. So we're working with multiple business units across multiple geographies; it's across multiple channels, and multiple use cases. You know, when we look at that customer in particular, we're helping with, we're actually helping with a broad first-party investment strategy where all of those business units are working together. And it's actually really incredible to see if they're able to invest in building up the direct to consumer relationship; they monetize it in multiple ways, and they help cement loyalty in ways that are self-reinforcing, as those different business units work together.

None: Think about that type of deal.

Bill: Yeah. So it's a it's multiple across a bunch of dimensions. So we're working with multiple business units across multiple geographies, it's across multiple channels and multiple use cases, you know there is when we look at that customer in particular, we're helping with we're actually helping with a broad first party investment strategy, where all of those business units.

Bill: Our working together and it's actually really incredible to see as they're able to invest in building up the direct to consumer relationship. They monetize it in multiple ways. They help cement the loyalty in ways that are self reinforcing as those different business units work together I think that that's a really incredible testament to how braze integrates both into the messaging surface as their.

Bill: I think that that's a really incredible testament to how Braze integrates both into the messaging surface as they're communicating with customers, but also the back end from a data perspective, so that all of those brands, all of those kind of, you know, divisions across the globe are able to work together and provide a coherent experience to the same customer throughout. And that's also a customer where there's still a lot of opportunity to continue to grow. You know, we think that when we look out across even our high seven-figure customers, you know, most of them, we still have a great opportunity to continue to expand both into net new channels as well as expand backwards, where, you know, most of these really big multinationals that are in our global strategic accounts program still coexist with the legacy marketing clouds. And, you know, if history is any guide, it's only a matter of time before we fully consolidate them. And that represents yet more upsell opportunity for us, even in customers that are already quite large. I got it.

Bill: Sitting with the customers, but also the back end from a data perspective that all of those brands all of those kind of divisions across the.

Bill: The globe, we're able to work together and provide a coherent experience at the same customer throughout it and that's also a customer where there's still a lot of opportunity to continue to grow we think that when we when we look out across even our high seven figure customers. Most of them, we still have great opportunity to continue to expand both into net new channels.

Bill: As well as expand backwards, where most of these really big multinationals that are in our global strategic accounts program, we feel coexist with the legacy marketing clouds and if history is any guide it's only a matter of time before we fully consolidate them out and that represents yet more upsell opportunity for us even in these customers that are already.

Bill: Large.

Bill: Helpful. And then on my follow-up question, we were at the ShopTalk conference last week in Las Vegas, which you all had a nice presence at. But one of the key themes of the conference this year was all about personalization through the entire kind of merchant-consumer relationship. And obviously, marketing is a big part of that. But the AI binge over the last year, this big wave of Gen-AI models seems to be pushing on customer interest for more personalization throughout that lifecycle. Do you think you're seeing that in some of your demand and sales cycles out there today that this push or rush for trying to adopt anything with the Gen-AI feature has actually been maybe an incremental tailwind over the last 12 to 18 months?

None: Got it helpful. And then my follow up question, we were at the <unk> Conference last week in Las Vegas.

None: Which you all had a nice presence there, but one of the key themes of the conference. This year was all about personalization through the entire kind of <unk>.

None: Merchant consumer relationship and obviously marketing is a big part of that but the AI bench over the last year. This big wave on Cheniere model seems to be pushing on customer interest for more personalization throughout that late cycle do you think you've seen that in some of your demand.

None: Sales cycles out there today that this push a rush for trended that anything with the G&A I'd feature is actually better than maybe an incremental tailwind over the last 12 to 18 months. Yeah. I think it's been helpful. You know as I mentioned before and when I talked about I when I talked about some of the things that hinder people moving from the legacy clouds.

Bill: Yeah, I think it's been very helpful. You know, as I mentioned before, and when I talked about some of the things that hinder people moving from the legacy clouds, a lot of them are just reasons why people feel that what they're doing today is good enough. And so when something like Gen AI enters the picture, it gives them a strong reason why what they're doing today might not be good enough, especially if they feel that they can't take full advantage of modern machine learning. And I think that when you look at, for instance, any company that has assembled a set of point solutions where they've got, you know, a half a dozen different channels and maybe three or four different software platforms that are servicing those channels, and you ask them, you know, how do they do a great job of optimizing across those channels? How do you actually deploy more sophisticated orchestration strategies that take into account the nonlinear customer journey?

None: You know a lot of them are just reasons why people feel that what they're doing today is good enough.

None: And so when something like Jan AI enters the picture. It gives them a strong reason why what theyre doing today might not be good enough, especially if they feel that they can't take full advantage of modern machine learning and I think that when you look at for instance, any company that has assembled a set of point solutions, where they've got a half a dozen different channels and maybe.

None: Three or four different software platforms that are servicing those channels and you ask them. How do you do a great job of optimizing across those channels. How do you actually deploy more sophisticated orchestration strategies that take into account the non linear customer journey. How do you. How do you keep all of them synchronized interactively so that when you have that opportunity.

Bill: How do you, you know, keep all of them synchronized interactively so that when you have that opportunity to personalize a moment that matters for the customer, which, by the way, shows up out of the blue because we engage with customers, engage with brands on their terms now? The simple answer is that when you've assembled a collection of point solutions like that, you simply can't leverage machine learning in the same way as you can with a vertically And so, you know, there have been a lot of examples over the years where additional complexity or new technical capability have come into play. And it's helped us move up the adoption curve and get to people that are maybe more and more reticent to go through the switching costs of moving from what they were doing before to a more modern form of customer engagement.

None: <unk> to personalize a moment that matters for the customer, which by the way shows up out of the blue because we engage with customers engage with brands on their terms now you know the simple answer is that when you have assembled a collection of point solutions like that you simply can't leverage machine learning in the same way as you can with a vertically integrated in <unk>.

None: Consolidated platform like <unk> and so you know there's there's a lot of examples over the years, where additional complexity or new technical capability has come into play and it has helped us move up the adoption curve and get to people that are maybe more and Barbara Tyson to go through the switching costs are moving from what they were doing before to a more modern form of customer engagement.

Bill: And I think that the advent of Gen AI is a really great example of that. Not only the capabilities that are available to you, but as we've spoken about before as well, there's also aspects of Braze, which are technically difficult to use sometimes. And I think that when you're able to. When you're able to actually bring to bear generative AI to, for instance, automatically generate email HTML for someone, or to automatically generate liquid syntax for them to be able to do a certain form of conditional, you know, conditional content personalization, or when you bring in into play things like tone control, and you give them a really powerful experimentation tool, and instead of them just kind of staring at a blank canvas and trying to figure out what the other three variants are, you know, we can suggest them, and they can move along more quickly.

None: I think that the advent of journey is a really great example of that I'm not only the capabilities that are available to you, but as we've spoken about before as well. There's also aspects of Braves, which are you know technically difficult to use sometimes and I think that when you're able to.

None: When you were able to actually bring to bear generative AI to for instance, automatically generate email HTML for someone or to automatically generate a liquid syntax or them to be able to do a certain form of conditional traditional content personalization or when you bring in into play things like tone control and you give them a really powerful experimentation tool.

None: And instead of them just kind of staring at a blank canvas and trying to figure out what the other three variance or we can suggest them and they can move up move along more quickly and so those are all great. Examples where you know a lot of the ways of doing our ways of doing customer engagement and a more modern way that's more agile that's more experimental that relies on more real time data, which are all things that are.

Bill: And so those are all great examples of how a lot of the ways of doing customer engagement in a more modern way that's more agile, that's more experimental, that relies on more real-time data, which are all things that are in our foundation. But for much of the marketing world, especially teams that are strapped for resources, it's historically been a little bit harder for them to use those. And so I think that it's both looking at places where Gen AI, or, you know, things like our transformer-driven item recommendations or things like our personalized path capability that are using machine learning and in order to do automated decision-making and automatically optimize, those are all, of course, improving results for people that are already deep in that optimization game, but there's a big part of the market as well that still needs to simply graduate from batch and blast.

None: Our foundation for much of the marketing world, especially teams that are strapped for resources you know, it's historically been a little bit harder for them to use those and so I think that it's it's both looking at places where Jenny I or you know things like our transformer driven item recommendations or things like our personalized path capability that are using machine learning and an orange.

None: You automated decision, making and automatically optimize those are all of course improving results for people that are already in deep in that optimization game, but there is a big part of the market as well that still needs to simply graduated from batch and blast and so to the to the extent that Jenny I can either motivate them to do so or it can smooth that path.

Bill: And so to the extent that Gen AI can either motivate them to do so, or it can, you know, smooth that path by improving their productivity or making the more technical parts of our product more accessible and, frankly, less scary, I think all of those things compound together to really help us. Helpful. Thank you very much. Our next question comes from Brian Peterson from Raymond James. Please unmute your audio and ask... Hi guys.

By improving their productivity or making the more technical parts of our product more accessible and frankly less scary I think all of those things compound together to really help us.

None: Got it helpful. Thank you very much.

None: Yeah.

None: Our next question comes from Brian Peterson from Raymond James Please limit your audio and ask your question.

Isabelle: Thanks for taking the question. So I think there's been some debate on how spam rules may be impacting the industry. I'm curious how much that's come up in your customer conversations and how you think that may kind of stack right because of the potential growth catalyst in terms of new logos in fiscal year 25.

Brian Christopher Peterson: Got it thanks for taking my question. So I think there's been some debate on how Sam rules may be impacting the industry I'm curious how much that's come up in your customer conversations and how you think that may kind of stack rank growth catalyst in terms of new logos in fiscal year. Yeah. So you know as I'm sure you're aware of Brazos been in front of those changes from the start and our customers are actually.

Bill: So, you know, as I'm sure you're aware, Braze has been in front of these changes from the start, and our customers have actually always been compliant with these rules due to how we operate our deliverability practice. But, nevertheless, we published a lot of material on it. We prepared our customers, partners, and the broader marketing community with content and webinars, and it was really positive. You know, I think that we managed the change without any noise or problems. Braze also doesn't pool senders together, and each one of our email-sending customers is in control of their own reputation.

Brian Christopher Peterson: Always been compliant with these rules due to how we operate our deliverability practice. Nevertheless, we published a lot of material on it we prepared our customers partners and the broader marketing community with content and Webinars and there was really positive I think that we navigated the change without any noise or problems I raise also doesn't pool centers together and each one of them.

Brian Christopher Peterson: E mail, sending customers is in control of their own reputation to.

Bill: To the point I just made, there are sometimes stumbling blocks to moving into a place like Braze, and this has historically been one of them. The need to manage your own reputation was sometimes one of the things that held customers back from shifting to Braze. But now that it's a requirement everywhere, the playing field is leveled, and our other differentiators are able to shine through. We also think that over time, changes of this nature by ISPs are likely to lead to negative selection bias in any tools that do continue to use shared IP pools, and that's going to cause them to continue to deteriorate in effectiveness over time. And so there might still be some people that are clinging to it. But, you know, from our perspective, if you're going to be on the right side of history, you just need to make this change.

Brian Christopher Peterson: To the point I just made.

Brian Christopher Peterson: There are sometimes stumbling blocks to move into a place like brazen. This has historically been one of them they need to manage our own reputation was some times one of the things that held customers back on shifting to braze, but now that it's a requirement everywhere. The Plainfield has leveled and our other differentiators are able to shine through and we also think that over time changes of this nature by us.

Brian Christopher Peterson: Fees are likely to lead to negative selection bias in any tools that do continue to use shared at peoples and that's going to cause them to continue to deteriorate and effectiveness over time and so there might still be some people that are clinging to it but from our perspective, if you're going to be on the right side of history. You just need to make this change and then I would say in terms of <unk> the impact.

Bill: And then I would say, in terms of sacrificing impact, you know, I don't think it's going to be a massive impact, but it's yet another example where anything which makes the deliverability landscape more complex benefits Braze relative to the rest of the category because of the sophistication that we have in targeting orchestration. This was true as GDPR came into effect. It was true when Apple rolled out their ATT framework.

Brian Christopher Peterson: I don't think it's going to be a massive impact, but it's yet. Another example, where anything which makes the delivery ability landscape more complex benefit sprays relative to the rest of the category because of the sophistication that we have in targeting and orchestration. This was true as GDP or came into effect. It was true in Apple rolled out their ATT framework. It was true last year as Kerry.

Bill: It was true last year as carriers started clamping down on short code spam and abuse and sharing. You know, in each of those cases, we've been on the right side of history, and those changes to the landscape only serve to strengthen our differentiation and create more reasons for marketers to move beyond, you know, the undifferentiated batch and blast that we were just talking about and embrace that more modern approach to customer engagement. And so, you know, when I look at the impact of things like this as a business, I think it's positive, but I would also just reiterate that the secular trend has been there for the last five plus years. You know, I think every six months across one of the channels that we work with, there's a major change that tells everyone to shape up and get more sophisticated, and Braze is already there waiting for them. And, you know, it's just yet another one of those things that we think catalyzes people to go through the switching costs and move to a more modern customer engagement platform. I appreciate all the color.

Brian Christopher Peterson: <unk> started clamping down on short code spam and abuse and sharing you know each of those cases, we've been on the right side of history and those changes to the landscape only served to strengthen our differentiation and create more reasons for marketers to move beyond the undifferentiated batch and blast that we were just talking about and embrace that more modern approach to customer engagement and so you know when I look at the impact of things like.

Brian Christopher Peterson: This is a business I think it's positive but I would also just reiterate that the secular trend has been there for the last five plus years, you know I think every six months across one of the channels that we work with there is a major change, which tells everyone to shape up and get more sophisticated and Brazos already there waiting for them and you know it's just yet another one of those things that we think catalyzes people.

Brian Christopher Peterson: To go through the switching costs are moving to a more modern and customer engagement platform.

Rosebel: I appreciate all the color and maybe a follow up Rosebel you mentioned on the gross margins I appreciate the guidance there, but theres a mixed driven dynamic that that's pressuring results in the first quarter does that mix change throughout the year to drive the improvement or are there. Other factors, that's driving that gross margin improvement throughout the year. Thanks, Matt Yeah. So there's a couple of things there.

Isabelle: And maybe a follow-up for Isabelle. You mentioned gross margins, you know, I appreciate the guidance there, but there's a mix-driven dynamic that's pressuring results in the first quarter. Does that mix change throughout the year to drive the improvement, or are there other factors that drive that gross margin improvement throughout the year? Thanks. Yeah, so there's a couple of things at play.

Isabelle: So, you know, as we continue kind of channel expansion and into more and more of these sort of premium messaging channels, this has always been part of our growth strategy. It supports the need for a sophisticated platform like ours for cross-channel orchestration, so all of that's great. What we've seen in particular with WhatsApp is that, obviously, it is a premium messaging channel, but it is sold at lower margins versus the rest of, you know, the parts of the platform.

Matt: Play. So you know as we continue kind of the channel expansion and into more and more of these for premium messaging channels and it's always been part of our growth strategy supports the need for sophisticated platform like ours for a cross channel orchestration. So all of that's great. What what we've seen them with in particular with Whatsapp I is obviously it is a premium messaging channel. It is.

Matt: Hold at lower margins versus the rest of.

The parts of the of the platform, we've seen faster adoption rates of this which is actually great. We're seeing our customers actually leg into their purchase volumes.

Isabelle: We've seen faster adoption rates of this, which is actually great. We're seeing our customers actually leg into their purchased volumes just much, much more quickly, which is great. And so we've reached sort of a steady state consumption for the purchased volumes faster than we have with some other channels. So while this is great, we're also operating at a relatively small scale still at these volumes, and so our unit cost for this channel, in particular, is still high. And so as that continues to grow in scale, we are going to be able to capitalize on cost optimization for that channel in particular, and we also have at play a number of other cost structure optimizations specifically for the technology stack that our teams are all working on. So you'll see, we're going to see the impact in Q1, but then sort of legging ourselves out of that and sort of sequential improvements in the gross margin, and then ensuring that we' Thank you. Our next question comes from Brian Schwartz from Oppenheimer. Please unmute and ask them.

Matt: Much much more quickly, which is which is great and so we've reached sort of a steady state consumption for the purchase volumes faster than that than we have with some other channels. So while this is right. We're also operating at a relatively small scale still in these volumes and so our unit cost for this channel in particular is still high.

Matt: And so as that continues to grow and scale, we are going to be able to capitalize on our cost optimization for that channel in particular, and we also have at play a number of other cost structure optimization, specifically for the technology stack that our teams are all working on so you'll see the worst you're going to see the impact in Q1.

But then sort of lagging ourselves out of that and for sequential improvements in the gross margin and then ensuring that we're within the range for the year on the quarters.

None: Thank you.

None: Our next question comes from Brian Schwartz from Oppenheimer. Please on mute and ask your question.

Bill: Thank you for taking my question this afternoon. I just have one I want to ask you about the evolution of the partner channel becoming a sales channel. So, thinking about the net new max for fiscal year 2025, are you planning for any contributions from the partner channel? Thanks.

Brian Jeffrey Schwartz: Thank you for taking my question. This afternoon I just have one I wanted to ask you about the evolution of the partner channel, becoming a sales channel so thinking about the net new Max for fiscal year 2025 are you planning for any contribution from the partner channel. Thanks, Yes.

Bill: Yeah, so I first clarified that our partner relationships are still ones where we perform the sale directly in the vast majority of circumstances. And so when you think about Braze from a channel perspective, you should think about these as mutually beneficial relationships where we're delivering services and revenue opportunities to our partners, both for integration and onboarding, as well as for ongoing creative services, data analysis, and ongoing implementation as they continue to expand to new use cases and new channels. But we certainly expect the source and influence pipeline from that partner ecosystem to continue to become more and more prominent as we move through the year. There's been a great upward trend as we look over the last, frankly, the last several years, but we've also seen it more markedly in the last few quarters. And we're excited about our future across that entire ecosystem. Thank you. Our next question comes from Michael Berg from Wells Fargo. Please unmute and ask them. Hi, thanks for taking my question and congrats on the quarter. I've got one for Bill.

None: So I'd first clarify that our partner relationships are still ones, where we perform the sale directly in the vast majority of circumstances and so when you think about Brady from a channel perspective, you should think about these as mutually beneficial relationships, where we're delivering services revenue opportunities to our partners both for integration and Onboarding as well as for ongoing.

None: In creative services data analysis, and an ongoing implementation as they continue to expand to new use cases, and new channels, but we certainly expect the source and influence pipeline from that partner ecosystem to continue to become more and more prominent as we move through the year, there's been a great upward trend as we look over the last you know.

None: Frankly over the last several years, but we've also seen it more markedly in the last few quarters and we're excited about we're excited about our future across that entire ecosystem.

None: Thank you.

None: Yeah.

None: Our next question comes from Michael Berg from Wells Fargo. Please send me and ask your question.

Michael H. Berg: Alright, Thanks for taking my question and congrats on the quarter.

Bill: You mentioned at the top of the call IDFA and cookies deprecating. Is that catalyzing potential changes in the MarTech software stack at a more meaningful clip than it has in the past? And how would you rank what catalyzes changes more holistically? Does that look any different in net new versus expanse?

Michael H. Berg: Got one for Bill you mentioned at the top of the call.

Michael H. Berg: Mentioning IBSA cookies deprecating catalyzing.

Michael H. Berg: Catalyzing potential changes in the Martech software stock more meaningful clip than it has in the past.

Michael H. Berg: And I guess, how would your stock grant worth highlighting changes, it's more holistically. It look any different than net new versus experience. Thank you.

Bill: Thank you. No, I think my answer here is generally the same as the content, the ground we just covered in response to the Gmail and Yahoo changes with respect to sender reputation and IP pools. And the high level there is simply that those are instances of both. And I guess the new part of this is that, in addition to that, adding complexity to the landscape, which I think benefits Braze and gives people reasons to move over to a more modern way of doing customer engagement. The changes that you referenced are also putting a higher premium on first-party data. And so, as brands continue to look at ways to replace the strategies that they were doing before that depended on third-party data, many of them move to first-party data first.

Michael H. Berg: I think my answer here is generally the same as the content. The ground. We just covered in response to the Gmail and Yahoo changes with respect to sender reputation and IP pools and and the high level. There is simply that those are instances of both and I guess the new part of this is that in addition to that <unk>.

Michael H. Berg: Adding complexity to the landscape, which I think benefits sprays and gives people reasons to move over to a more modern way of doing customer engagement. The changes that you referenced are also putting out a higher premium on first party data and so as brands continue to look at ways to replace the strategies that they were doing before that dependent on third party data many of them moved.

Michael H. Berg: Our first party data first and I actually have given a number of talks on this at our city by city event series over the last year about the three stages of first party data investment that we see a lot of brands go through the first stage is in response to things like the idea of a change or the cookie Apocalypse or what have you. They keep trying to do things the way.

Bill: And I actually have given a number of talks on this at our city by city event series over the last year about the three stages of first party data investment that we see a lot of brands go through. You know, the first stage is in response to things like change, or the cookie apocalypse, or what have you; they keep trying to do things the way they were before. But suddenly, their third-party data sets are incomplete, or they're illegal, or what have you, or they're incorrect.

Michael H. Berg: But they were before but suddenly they're third party datasets are incomplete or they're illegal or or what have you or they are incorrect and so there. They try to replace that with first party data that is of course effective and you see that and features like our audience think product where you can use first party data to help manage your paid at audiences and continue to maintain a high level.

Bill: And so they try to replace that with first-party data. And that is, of course, effective, and you see that in features like our audience product, where you can use first-party data to help manage your paid audiences and continue to maintain high levels of relevance and high levels of targeting efficiency even as some of those third-party data sets are harder to access.

Michael H. Berg: <unk> of relevance and high levels of targeting efficiency, even at some of those third party datasets are harder to access and the second is then when you start to move into doing you know modern customer engagement, which is being able to leverage their first party relationship that you have with the customer you use the first party data to understand them better and then you use customer engagement software to help shape their journey in a way that's more posit.

Bill: The 2nd is then when you start to move into doing modern customer engagement, which is being able to leverage the 1st party relationship that you have with the customer. You use the 1st party data to understand them better, and then you use customer engagement software to help shape their journey in a way that's more positive to you. That's where the vast majority of bundled customers are today.

Michael H. Berg: To you that's where the vast majority of <unk> customers are today and then when you get to the third stage you start to understand that those first party relationships are not just an opportunity to talk to a customer, but theyre actually a platform under which you can innovate within your business and you know when I talked about that eight figure contract, where you've got different parts of the business that are operating together and there.

Bill: And then, when you get to the 3rd stage, you start to understand that those 1st party relationships are not just an opportunity to talk to a customer, but they're actually a platform on which you can innovate within your business. And when I talked about that 8-figure contract, where you've got different parts of the business that are operating together, and they're doing so in a way that is self-reinforcing, that's an opportunity that I think more and more businesses are going to be able to do on the back of investment in 1st party relationships and 1st party data. When you have an ability to understand your consumers and talk with them over a long period, your ability as a business to put more products and services in front of them and to be able to leverage that 1st party relationship as an asset in order to diversify your business continues to grow.

Michael H. Berg: We're doing so in a way that's self reinforcing that's an opportunity that I think more and more businesses are going to be able to do on the back of investment in first party relationships and first party data when you have an ability to understand your consumer and talk with them over and over you know the long a long time period your ability as a business to put more products and services in front of them and to be.

Michael H. Berg: To elaborate to that first party relationship as an asset in order to diversify your business continues to grow and that's one of the reasons that I'm. So excited about the future of Brazos potential because I think we're still in the very early innings of that third stage of business model evolution and it more and more categories are waking up to the opportunities that they can create for.

Bill: And that's 1 of the reasons that I'm so excited about the future of Braze's potential because I think we're still in the very early innings of that 3rd stage of business model evolution, and more and more categories are waking up to the opportunities that they can create for themselves once they build out a 1st party relationship interface with their customers, which, of course, with the advent of mobile and so much becoming digital, as we continue to And so, when we talk about, I mentioned Nestle Purina as an example, that's a category that historically didn't have 1st party relationships with their customers, but through subscription services and other digitally connected products, they're starting to create the interfaces for those, and that's causing them to rethink their entire product families in a way that they can actually build on top of the foundations of the 1st party relationships So, that, I think, is super exciting. What does that do this year?

Michael H. Berg: Themselves once they built out a first party relationship interface with their customers, which of course with the advent of mobile and so much becoming digital IDE as we continue to move into the future means that every vertical is going to have that opportunity in a way that many of them didn't experience before and so when we talk about you know I mentioned Nestle purina as in.

Michael H. Berg: Example, you know that's a category that historically didn't have first party relationships with their customers, but through subscription services and through other digitally connected products are starting to create the interfaces for those and that's causing them to rethink their entire product families. In a way that they can actually build on top of the foundations of the first party relationships and diversify.

Michael H. Berg: By their business model. So that I think is super exciting you know what does that do this year what does that do in the near term you know I don't think it's discernible from all the other changes that we have that have continued to kind of modify the environment, but I think if you take a step back and you look at the secular tailwind as you look at that investment and first party data and all the things that are driving people to.

Bill: What does that mean in the near term? I don't think it's discernible from all the other changes that we have that have continued to kind of modify the environment, but I think if you take a step back and you look at those secular tailwinds, you look at that investment in 1st party data, and all the things that are driving people to really adopt the more modern customer engagement practices, those all point to massive future opportunities. Powerful, Thank you.

Michael H. Berg: It really adopt the more more modern customer engagement practices that those all point towards massive future opportunity for brands.

Okay. Thank you.

Bill: Our next question comes from Nick Altman from Scotiabank. Please unmute and ask him. Awesome. Thanks, guys. Um, just to build on Ryan's question around that COVID renewal cohort, I guess I wanted to kind of take the flip side of it. And can you maybe just talk about how customers who have maybe signed, you know, shorter duration deals over the last couple years, how those renewals specifically are trending, and you guys called out upsell was very strong in this quarter? So maybe just kind of compare and contrast the sort of upsell dynamics with customers who are maybe on shorter duration deals who maybe signed when the macro was a little bit choppier versus, you know, that COVID renewal cohort. Thanks.

Michael H. Berg: Our next question comes from Nick Altmann from Scotiabank. Please on mute and ask your question.

Nicholas William Altmann: Awesome. Thanks, guys.

Nicholas William Altmann: Just to build on Ryan's question around that co that renewal cohort I guess I wanted to kind of take the flip side of it.

Nicholas William Altmann: Can you maybe just talk about how customers who are maybe sign.

Nicholas William Altmann: Shorter duration deals over the last couple of years, how those renewals specifically are trending and you guys called out upsell is was very strong in this quarter. So maybe just kind of compare and contrast, the sort of upsell dynamics with customers, where maybe on shorter duration deals that may be signed when the macro was it a little bit choppy or versus.

None: That COVID-19 renewal cohort. Thanks, Yeah, it's a great question, especially in light of the results that we just shared because as you can see in the stronger P. O results in Isabella alluded to this we did have a slight increase in our average overall contract length, and we are actually seeing customers who were really nervous.

Isabelle: Yeah, it's a great question, especially in light of the results that we just shared. Because as you can see, in the strong RPO results, and Isabelle alluded to this, we did have a slight increase in our average overall contract length. And we are actually seeing customers who were, you know, really nervous about payment terms, they were really nervous about contract length, relaxing again and committing to longer-term contracts. And I don't think we're seeing any material difference in renewal rates for people that were previously on one year or two-year or whatever have you.

About payment terms, they were really nervous about contract length, relaxing again and committing to longer term contracts and I don't think we're seeing any material difference in renewal rates for people that are that were previously on one year or two year or what have you, but what we are seeing is upon renewal more willingness for people to make longer term commitments again to make more upfront payments to.

Bill: But what we are seeing is, upon renewal, more willingness for people to make longer-term commitments again, to make more upfront payments to do so a little bit quicker. And we are seeing some of those parts of our movement revert back to, you know, more of what we've been used to over the last few years. Great. Thanks, guys.

None: So I'm a little bit quicker than we are seeing some of those parts of our motion revert back to more of what we've been used to over the last few years.

None: Great. Thanks, guys Yep.

Isabelle: Yep. Our next question comes from Yun Kim from Loop Capital. Please unmute and ask, " Okay, great.

None: Our next question comes from Yun Kim from Loop capital. Please ask your question Okay great.

Bill: Um, so just on the WhatsApp channel, seems like that's wrapping up pretty meaningfully. If you can, could you remind us how the pricing works on that channel? And, you know, is that similar to the SMS channel? And also, you know, is the adoption of the WhatsApp channel more driven by existing customers? Or is this driving new logo ads, especially in your international market? Thanks. Yeah, so the pricing is similar to SMS and email in the sense that we bill for it on a CPM basis. And then, similarly, any of the monthly active users that you are communicating with through WhatsApp that might be net new because of that channel are going to count against your MAU allotments.

Yun Suk Kim: Just on the Whatsapp channel it seems like that's ramping up pretty meaningfully.

If you can remind us how the pricing works on that channel and.

Yun Suk Kim: You've got similar to like a similar channel and also.

Yun Suk Kim: He is the adoption of Whatsapp channel driven by existing customers or is this driving new logo adds especially in your international markets. Thanks.

Yun Suk Kim: So the pricing is similar to SMS and email in the sense that we bill for it on a CPM basis, and we and then similarly any of the monthly active users that you are communicating with through whatsapp that might be net new because of that channel are going to count against your Mou allotments and so similar to our other premium channels it monetize it.

Bill: And, similar to our other premium channels, it monetizes in both ways. In terms of upsell versus net new, it's been a great upsell channel because customers that are already running strategies on SMS or even push notifications are able to quickly move those over to those channels. And of course, as we've spoken about so many times, all of the features that they're used to from a targeting and orchestration reporting standpoint are available to them when they move to the WhatsApp channel.

Yun Suk Kim: Both ways I in terms of upsell versus net new it has a it's been a great upsell channel because customers that are already running strategies on SMS or even push notifications are able to quickly move those over to those channels and of course as we've spoken about so many times all of the features that they're used to from a targeting and an orchestration and reporting standpoint.

Yun Suk Kim: Are available to them when they move to the Whatsapp channel are the new business opportunities are also there, especially as he alluded to internationally I would also call out, though as Isabela mentioned on the gross margin point Whatsapp is a brand new channel for us and so with respect to our pricing versus the overall unit margin of that channel.

Bill: The new business opportunities are also there, especially as you alluded to internationally. I would also call out, though, as Isabelle mentioned in the gross margin point, WhatsApp is a brand new channel for us. And so with respect to, you know, our pricing versus the overall unit margin of that channel, we are still working to optimize that more. As it grows as a channel for us, we will be able to commit to higher volumes and improve our own cost function on it. And so that's some of the near-term pressure that you're seeing caused by that premium channel mix. But it's something that we are confident we're going to be able to manage over time, just as we've done with SMS and email. Okay, great. I have a real quick question for Isabelle.

Yun Suk Kim: We are still working to optimize that more you know as it grows as a channel for us we will be able to commit to higher volumes and improve our own cost function on it and so that's some of the near term pressure that you're seeing caused by that premium channel Nixon, but it's something that we are confident we're going to be able to manage over time, just as we've done with SMS and email.

None: Okay, Great and a real quick question for me is about any change in the initial land deal size.

Isabelle: Any change in the initial land deal side with new customers and how that's been trending? Yeah, no, no, no major differences there across the various segments. So obviously, continuing to see more strength in the enterprise. And so the land in an enterprise might typically be larger, obviously, than lands at SMB. But you know, among the segments, there's no material change in the size of the lands.

None: With new customers and how that's been trending.

None: Yeah, No no no major differences there across the various segments and so obviously continuing to see more strength in the enterprise and so the land in an enterprise might typically be larger obviously than glands at SMB and but you know among the segments. There's no material change in in the size of the lands and again, we've talked about this in the past we can.

Isabelle: And again, you know, we've talked about this in the past; we tend not to worry about the size of the lands because once we're in, our ability to kind of show ROI and value then leads to the expansion strategy over time. Okay, great. Thank you. Our next question comes from Hannah Rudoff of Piper Sandler.

None: Do not worry about the size of the land because once we're in our ability to kind of show ROI and value then leads to the expansion strategy over time.

None: Okay, great. Thank you.

None: Our next question comes from Hana Rudolph from Piper Sandler.

Bill: Hi guys, thanks for taking my question. Just one for me here.

Hannah Sable Rudoff: Hi, guys. Thanks for taking my question just one for me here.

Bill: So, a four-year growth outlook of 21-22% is comparable to your initial guidance last year, which does suggest that demand is stabilizing. We kind of spoke to this in a previous question, but just wondering, what are the products and partnerships that could be most likely to transfer outside this year? I mean, I think it covers a lot of the things that we've spoken about so far on the call. We're definitely excited about the agency ecosystem and the global systems integrator ecosystem being able to continue to source and influence new pipeline. We're excited about the rebrand and the investments that we've put into marketing at the beginning of the year, the expansion of sales capacity as well, you know, bringing new heads into the sales organization in new geographies as well.

What are your growth outlook.

Hannah Sable Rudoff: 2% is comparable to your initial guidance during last year.

Hannah Sable Rudoff: Ethylene is stabilizing that spoke to the previous question, but just wondering what is the product.

Hannah Sable Rudoff: Yes.

None: That's very helpful.

None: I mean, I think it's a lot of the things that we've spoken about so far on the call. We're definitely excited about the agency ecosystem and the global systems integrator ecosystem being able to continue to source and influence new pipeline I. We're excited about the rebrand and the investments that we've put into marketing at the beginning of the year the expansion of sales capacity as well.

None: Bringing new heads into the sales organization in new geographies as well and then we've got great new products that we're able to monetize both for our existing customers you can cross sell and upsell as well as provide new starting points for net new business as we just alluded to in the water on that Whatsapp question, and so I think across the board.

Bill: And then we've got great new products that we're able to monetize both for our existing customers, who can cross sell and upsell, as well as provide new starting points for net new business, as was just alluded to in that WhatsApp question. And so I think across the board, you know, we're excited about a lot of different things contributing to what's going to be a good year. All makes sense now. Thank you. Our next question comes from Cole Erskine from P.D. Callen. Please unmute and ask... Great, thanks, guys. Just one for me.

None: We're excited about a lot of different things contributing to a what's going to be a good year.

None: Makes sense. Thank you.

None: Our next question comes from Paul <unk> from TD Cowen. Please on mute and ask a question.

Paul: Great. Thanks, guys. Just one from me Bill I was wondering if you could give us an update on efforts to kind of selling the product teams and data teams and targeted incremental budgets are outside of our core marketing that you usually target. Thanks.

Bill: Bill, I was wondering if you could give us an update on efforts to kind of sell into product teams and data teams and target incremental budgets that are outside of, you know, core marketing that you usually target. Thanks. Yeah, absolutely. So I'll break those apart, because when we look at it from a data perspective, you know, I think we are so far not selling a lot to data teams, but we are making their lives easier. And what that's doing is it's getting more data into Braze more quickly with a lower total cost of ownership. And it's enabling marketers to run more use cases in Braze and expand into new channels and new and new message volumes, and just generally, you know, increase their usage of Braze. And so we very much view data as an input into Braze, and it's one that we want to make sure gets to us quickly and easily.

Bill: Yeah, absolutely so I'll break those apart because when we look at it from a data perspective, you know I think we are so far not selling a lot to data teams, but we are making their lives easier and what that's doing is it's getting more data into braze more quickly with lower total cost of ownership and it's enabling marketers to run more use cases in Braves and.

Bill: Handed to do channels, and new and new message volumes and just generally increased their usage of brain and so and we very much view data as an input into braised and it's one that we want to make sure. It gets to us quickly and easily it's why you're seeing so much investment. So broadly we're still are very committed to our partnerships across the entire data ecosystem as well as building up.

Bill: It's why you're seeing so much investment so broadly; we're still very committed to our partnerships across the entire data ecosystem, as well as building out things like our data transformation capabilities and cloud data ingestion. And all of these are working to try to make data science teams' lives easier, both during integration onboarding, as well as on an ongoing basis as they continue to work with Braze over time. On the product side, you know, we're continuing to see us expand with new capabilities like feature flags. We also are working on more in-product capabilities like landing pages, our content cards are getting more flexible, the surveys capability continues to get more powerful, you know, those are all channel expansions that are some of those you maybe wouldn't think of as a traditional marketing channel. We refer to them as channels because we orchestrate them in the same way and And I think that if you want to kind of think about where the ownership of those things is, if they're impacting the user experience in the product and affecting product behavior, we're targeting those more at product and engineering buyers, whereas channels that are more traditionally owned by CRM teams, you know, you would probably call the marketing buyer.

Bill: Out things like our data transformation capabilities in cloud data ingestion I mean, all of those are working to try to make data science teams lives easier both at integration Onboarding as well as on an ongoing basis as they continue to work with Grace.

Bill: Overtime on the product side, I know, you're continuing to see us expand with new capabilities like feature flags and we also are working on more in product capabilities like landing pages are content cars are getting more flexible the surveys capability continues to get more powerful you know those are all channel expansions that are some of those you may be you wouldn't think of as a traditional marketing.

Bill: Channel, we refer to them as channels, because we're orchestrating them in the same way in their actions that are being taken by canvas that ex that impact the user experience and I think that if you want to kind of think about where the ownership of those things or if theyre impacting the user experience in the product and affecting the product behavior, we're targeting those more our product and engineering buyers, whereas channels that are more.

Bill: Actually owned by CRM teams, you know you would probably call the marketing buyer, but broadly we think of all of this is customer engagement and if you go back to some of the comments I made earlier about the role that we have to play to be a companion to the customer as they move through their journey interacting with the products and services are the brands that we work with you know to be a.

Bill: But broadly, you know, we think of all of this as customer engagement. And if you go back to some of the comments I made earlier about the role that we have to play to be a companion to the customer as they move through their journey, interacting with the products and services of the brands that we work with, you know, to be a companion, we need to be in the product experience just as much as we are in the traditional marketing channels. And that's something that we're committed to, and we're excited to see our customers adopting. Super helpful, thank you.

Bill: We need to be in the product experience just as much as we are in the traditional marketing channels and that's something that we're committed to and we're excited to see our customers adopting.

None: Super helpful. Thank you.

Isabelle: We have time for one more question. Our final question will come from Taylor McGinnis from UBS. Taylor, your line is open.

None: We have time for one more question. Our final question will come from Karen Mcginnis from UBS Taylor Your line is open.

Bill: Yeah, hi, thanks so much for taking my question. So it sounds like there's, you know, noise in the net customer ads number. So is there any color you can provide on what you're seeing in terms of new logo era growth, exiting and starting the year, and how we should think about the potential trajectory path for that this year? Thanks.

Taylor Anne McGinnis: Yeah, hi, thanks, so much for taking my question. So it sounds like there's no noise in the net customer adds number. So is there any color you can provide on what you're seeing in terms of new logo aircrafts exiting and starting the year and how we should think about the potential trajectory path or without this year. Thanks.

Isabelle: Yeah, so the new logo ads for the quarter were not dissimilar, or logos, when you think of order forms, were not dissimilar from what they've been historically. So the number that you're seeing is sort of muted for two reasons. One is that we were very strong in Q4 in terms of upsell, and so a lot of those net new order forms were done in the context of larger enterprises where you can penetrate a new geography, a new business unit, et cetera. And so you're not seeing kind of all of the new order forms that are there.

Taylor Anne McGinnis: Yeah. So the net net the new logo adds for the quarter was not dissimilar or logos. When you think of order forms was not dissimilar from what it's been historically so you know that the number that you're seeing as me is sort of muted for two reasons. One is we were very strong in Q4 in terms of upsell.

Taylor Anne McGinnis: And so a lot of those net new order forms were done in the context of larger enterprises, where you can penetrate a new geography, and new business unit et cetera.

Taylor Anne McGinnis: So you're not seeing kind of the all of the new order forms that are there and then churn as I mentioned at the lower end of the contract sizes down at the F&B was still challenged and so that that sort of took took the number down as well, but when we look at the evolution of net new order forms so that is new contracts with new.

Bill: And then churn, as I mentioned, at the lower end of the contract sizes down at S&B was still challenging. And so that sort of took the number down as well. But when we look at the evolution of net new order forms, that is, new contracts with new counterparties, I won't say customers; it's just a new counterparty. That actually was not dissimilar from trends that we have seen in the last couple of quarters. So that was more normalized. It was really more that it was more concentrated in the enterprise and therefore more upsells in the context of existing parent companies. And then, obviously, the churn at the S&B level worked against it.

Taylor Anne McGinnis: Counterparties, it's I won't say customers, it's just a new counterparty and that actually was not dissimilar from trends that we've seen in the last couple of quarters. So that that was more normalized it was really more that it's more concentrated in the enterprise and therefore more upsells in the context of our existing parent companies and then obviously the churn of the AR.

Taylor Anne McGinnis: The at the SMB level worked against us.

Isabelle: Great, thank you. All right, well, that concludes... All right. Yes. Thank you, everyone. We're excited about the year ahead and looking forward to chatting with you again in a few months.

None: Great. Thank you.

None: Alright, well that conclusions in the queue.

None: Alright, yes. Thank you everyone. It's we're excited about the year ahead and looking forward to chatting with you again in a few months.