Q4 2025 Braze Inc Earnings Call
Welcome to the Brave fiscal fourth quarter 2025 earnings Conference call. My name is Lila and I'll be your operator for today's call.
At this time all participants are in a listen only mode.
Christopher Ferris: After the Speakers' presentation, we will conduct a question and answer session I'll now turn the call over to Christopher Ferris head of Braves Investor Relations. Thank you operator, good afternoon, and thank you for joining us today to review <unk> results for the fiscal fourth quarter 2025, I'm joined by our co founder and Chief Executive Officer, Bill <unk>, and our Chief Financial Officer.
Isabel Winkles: Isabel Winkles.
Isabel Winkles: We announced our results in our press release issued after the market close today. Please refer to the Investor Relations section of our website at investors start brace dot com for more information and a supplemental presentation related to todays earnings announcement.
Isabel Winkles: During this call we will make statements related to our business that are forward looking under federal Securities laws and the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995. These statements include but are not limited to statements regarding our financial outlook for the first quarter and fiscal year ended January 31, 2026, the anticipated closing of.
Isabel Winkles: Benefits from and product advancements due to our anticipated acquisition of offer fit our expectations concerning new customer verticals are anticipated customer behaviors, including vendor consolidation and replacement trends and their impact on braise or potential market opportunity and our ability to effectively execute on such opportunity and our long term financial <unk>.
Isabel Winkles: <unk> and goals. 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 material risks and uncertainties that could affect our actual results. Please refer to the risks identified in todays press release.
Isabel Winkles: 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 2000, and twenty-five performance. In addition to the impact these items have on the finance.
Isabel Winkles: Results.
Isabel Winkles: 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.
Isabel Winkles: <unk> prepared in accordance with U S GAAP and now I'd like to turn the call over to Bill.
Bill: Thank you, Chris and good afternoon, everyone. We delivered strong fourth quarter results generating $164 million of revenue up 22% year over year and 5% from the prior quarter again, demonstrating the high ROI and long term value of the Braves customer engagement platform, along with the strong execution of our teams around the world. We drove continued efficiency.
Bill: Cross our business, recognizing nearly $8 million of non-GAAP operating income in the quarter and achieving a non-GAAP operating margin of 5.0% up from negative five 7% in the fourth quarter of last year. We also achieved our third straight quarter of non-GAAP net income profitability generating over $12 million of net income and over $15 million of free cash.
Bill: Cash flow.
Bill: Our financial results for the full year demonstrated impressive operating leverage including $18 million of non-GAAP net income nearly $20 million of free cash flow and an 850 basis point improvement in non-GAAP operating income margin, which combined with last year's efficiency efforts to represent nearly 20 percentage point improvement over the last two fiscal years.
Bill: As previously discussed we expect to generate positive quarterly non-GAAP operating income and free cash flow going forward. We are proud of these financial achievements as we continue on our journey to become the leading customer engagement platform globally, and we look forward to sustaining profitable growth in the coming quarters and years, while also thoughtfully reinvesting to grow our business.
Bill: We previously highlighted the legacy vendor replacement cycle and point solution consolidation trends and we continue to capitalize on those in the fourth quarter securing a diverse set of new business wins were braces, replacing legacy marketing clouds, including a U S. Fintech, a large U S retailer and energy company in EMEA and a ticket broker in APAC just to name a few we also.
Bill: We continue to win against both channel specific point solutions and homegrown tools across a diverse set of industries geographies and use cases. Some notable takeaways in the quarter included a leading U S consumer rating service, our U S gaming business, a Saudi Arabian delivery application, our careers website in EMEA and a telecommunications company in APAC among others.
Bill: We are confident that both the legacy replacement cycle and vendor consolidation trends, which have been a tailwind for some time will create more opportunities for <unk> to gain market share as brands increasingly strive to upgrade their customer engagement strategies and leverage new AI, driven advancements to achieve productivity gains and build strong relationships with their customers Q.
Bill: Q4 also included our highest net new customer result of FY twenty-five rising by 85 to 2000, and 296 up 252 year over year, New business wins and Upsells included Americas test kitchen dish can Dunkin' UAE, who ASCII legal and general movie cinemas Qdoba Mexican each springer nature, and Tony's along with them.
Bill: Many others the quarter also illustrated the diversification of our customer base as we secured new business across a wide range of industries and geographies, including U S based specialty retailers and restaurants are consumer software firm in APAC automobile companies in the U S and Europe, our security business in EMEA and a digital media company in APAC just to name a few.
Bill: Our large customer additions were also strong with our $500000 plus are our customers increasing to 247 up 22% year over year, demonstrating the desire of enterprises to leverage first party data and advanced artificial intelligence to drive sophisticated cross channel customer engagement at scale. Our continued diversification across verticals is driven by a trend that we have.
Bill: Been discussing for years, the increasing importance of first party data as businesses of all kinds strive to better understand their customers and unlock the ability to efficiently communicate with them through digital product experiences and first party messaging channels.
Bill: We believe that the super cycle of investment across verticals continues to increase braces longterm opportunity as modern businesses prioritize first party data collection and customer engagement, thereby building new company assets in the form of actionable first party relationships with their customers.
Bill: Looking ahead, we expect these same businesses to capitalize on the growing strength and attachment of those customer relationships to diversify their own business offerings forging more durable bonds with our customers and finding opportunities for incremental profit along the way.
Bill: Well, we're very excited about the diversity of the opportunity ahead of US. We're also now starting to systematically lean into our largest verticals to ensure that braces flexibility and power can be easily wielded for common use cases in each major industry. The first such vertical to see this focused R&D treatment is also our largest retail and consumer goods, which accounts for roughly one fifth of race.
Bill: This business to further strengthen our leadership in this vertical we recently announced enhanced E. Commerce features and an upgraded shopify integration. These updates include prebuilt ecommerce templates pre defined event tracking for abandoned carts customizable landing pages and expanded whatsapp commerce capabilities, such as product catalogs and in thread shopping experiences by simple.
Bill: Buying implementation and accelerating time to value. These enhancements empower ecommerce marketers to drive higher engagement and conversions. Moreover, the shopify integration enables seamless bidirectional data flow, allowing enterprise brands like L Beauty Hugo boss, Jim Sharp gap and overstock to create more personalized customer journeys and improve conversion rates and <unk>.
Bill: Time value.
Bill: This strategic partnership with Shopify also fosters deeper collaboration between both companies go to market teams unlocking mutual value in the enterprise segment in particular, a shopify continues expanding up market. It can leverage <unk> expertise and enterprise engagement to accelerate digital transformation for legacy Commerce and marketing systems.
Bill: As we look ahead, we continue to believe that there's never been a better time to be a better marketer the increasing agility of data the growth of channels. The explosion of AI and the rising sophistication of marketers means brands have a unique opportunity to connect with their customers like never before building long lasting relationships with their customers and it's not just about the tired trope.
Bill: Finding the right message for the right channel at the right time, it's about understanding customers and greater depth engaging with them more completely and strengthening customer relationships through the delivery of harmoniously connected messages and products experiences a gentex AI in particular is crucial for optimizing relevance and achieving higher levels of personalization at scale as Decisioning agents.
Bill: Economists Lee experiment learn and deliver highly relevant personalized experiences at forge our annual customer conference last September we shared our vision for project catalyst a proprietary agent designed to help brands personalize and optimize experiences with highly relevant journeys content and incentives and we're on track for the first private beta release of project catalyst in late Q.
Bill: One.
Bill: Building on this vision, we are excited to announce the braces entered into a definitive agreement to acquire offer fit a leading AI decisioning company that leverages proprietary reinforcement learning technology to enable brands to deliver highly relevant personalized customer engagement at scale in a cash and stock deal valued at $325 million for nearly five years off.
Bill: Or if it has been perfecting a multi agent solution that autonomous really explore solution spaces across the many dimensions of lifecycle marketing campaigns, producing individualized recommendations for cross channel delivery and content strategies in partnership with customer engagement platforms, and marketing cloud services like Braves, Salesforce marketing cloud and <unk> the technology approaches based on ensemble.
Bill: Of contextual bandits and is highly flexible, replacing the manual work of a b testing with reinforcement learning agents that autonomously experiment and learn optimal actions offer fits.
Bill: Instigated AI decisioning can be deployed in a wide array of experimentation and optimization use cases and their approach has been highly successful, enabling the company to land and expand with large enterprises across numerous industry verticals over a short period of time.
Bill: Offer fixed customer base vertical focus and user sophistication complements raises enterprise motion in particular like braids, an ideal large offer fit customer is a high scale BDC brand investing in sophisticated marketing technology. Their average starting contract is typically in excess of $250000 per year with top industry verticals, including financial service.
Bill: His retail restaurants media and streaming energy telco and travel in fact as offer fits most prominent partner nearly one third of current offer fit customers use raise as their primary customer engagement platform and what their go to market motion is still focused in the United States they've shown an ability to sell globally that we expect will be amplified by Brazos robust existing press.
Bill: Once across EMEA, Latam and APAC.
Bill: In the near term, we believe offer fit solution will help us grow deal sizes, they're unique reinforcement learning products and services and also help us differentiate versus competitors by providing a wide spectrum of AI driven optimization capabilities at various price points and service levels.
Bill: Over the medium term much as we've done with other core aspects of Breeze AI, we will infuse offer fits agents and machine learning models throughout the brace platform, allowing us to jointly solve new use cases and enhance existing features to help brands deliver more relevant customer engagement.
Bill: Finally, we believe their engine and expertise will enable brace to more quickly advance multiple brace AI priorities further positioning Braves as a leader in AI and customer engagement to capitalize on a massive market opportunity globally. We're incredibly excited to have offer fits team and technology, joining braze, combining our collective years of research and development into machine learning and artificial intelligence.
Bill: To advance our product ecosystem and drive brilliant experiences for our customers and their consumers I'll conclude my remarks by reiterating our excitement in the future of Braves and the confidence in our long term growth story. Thank you for your interest and support embrace and now I'll turn the call over to Isabella.
Isabel Winkles: Thank you Bill and thank you everyone for joining us today as Bill stated, we reported a strong fourth quarter with revenue, increasing 22% year over year to $164 million driven by a combination of existing customer contract expansions renewals and new business.
Isabella: 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 total customer account increased 12% year over year to 2296 customers as of January 31 up 250.
Isabella: Two from the same period last year and up 85 from the prior quarter. Our total number of large customers, which we define as those spending at least $500000 annually grew 22% year over year to 247 and as of January 31 contributed 62% to our total air or this compares to a 60% contribution as of the same quarter.
Isabella: Last year measured across all customer dollar base net retention was 111% while dollar based net retention for our large customers with 114% expansion was again broadly distributed across industries and geographic regions revenue outside the U S contributed 45% to our total revenue in the fourth quarter consistent with the prior quarter of this.
Isabella: Year, and up 100 basis points from 44% in the prior year quarter in the fourth quarter. Our total remaining performance obligation was $793 million up 24% year over year and up 11% sequentially current RPI with $505 million up 23% year over year and up 10% sequentially.
The year over year increases were driven by contract renewals and Upsells and the signing of new customer contracts overall, our dollar weighted contract length remains at just over two years.
Isabella: non-GAAP gross profit in the quarter was $112 million, representing a non-GAAP gross margin of 69.9%. This compares to a non-GAAP gross profit of $89 million and non-GAAP gross margin of 67.9% in the fourth quarter of last year. The increase in year over year margin was driven by continued cost optimization of our tech.
Isabella: <unk> stack with additional benefits from personnel efficiencies, partially offset by higher premium messaging volumes non.
Isabella: non-GAAP sales and marketing expenses were $60 million or 37% of revenue compared to $55 million or 42% of revenue in the prior year quarter. While the dollar increase reflects our year over year investments in head count costs to support our ongoing growth and global expansion. The improved efficiency reflects our disciplined investment approach to read.
Isabella: Source deployment across our go to market organization, non-GAAP, R&D expense was $23 million or 14% of revenue compared to $21 million or 16% 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.
Isabella: Our R&D expenditures reflect our intentional yet disciplined technology investment strategy and are in line with our long term non-GAAP R&D percent of revenue target of 13% to 15% non-GAAP G&A expense was $21 million or 13% of revenue compared to $20 million or 15% of revenue in the prior year quarter.
Isabella: The dollar increase was driven by investments to support overall company growth and global expansion non-GAAP operating income was $8 million or 5% of revenue compared to a non-GAAP operating loss of $7 million or negative 6% of revenue in the prior year quarter.
Isabella: non-GAAP net income attributable to <unk> shareholders in the quarter was $12 million or 12 cents per share compared to a loss of $3 million or a loss of four cents per share in the prior year quarter.
Isabella: Now turning to the balance sheet and cashless statement, we ended the quarter with approximately $514 million in cash cash equivalents restricted cash and marketable securities cash provided by operations during the quarter was $17 million compared to cash provided by operations of $4 million in the prior year quarter.
Isabella: Including the cash impact of capitalized costs free cash flow in the quarter was $15 million compared to a negative free cash flow of $4 million in the prior year quarter and as we have noted in the past we expect our free cash flow to continue to fluctuate from quarter to quarter, given the timing of customer and vendor payments.
Isabella: Now turning to guidance. Please note that our formal guidance excludes the impact of the planned offer fit acquisition, which we expect to close in the second quarter. The transaction is expected to add approximately two percentage points to year over year revenue growth and be modestly dilutive to non-GAAP operating income margins in the fiscal year.
Isabella: We plan to update our guidance to account for the transaction after it closes.
Isabella: For the first quarter of fiscal 2026, we expect revenue to be in the range of 158 million to $159 million, which represents a year over year growth rate of approximately 17% at the midpoint as a reminder, our first quarter contains three fewer days compared to the other three quarters of the year, which each contain 92 days.
Isabella: First quarter non-GAAP operating income is expected to be in the range of zero to $1 million first quarter. non-GAAP net income is expected to be 4.5 million to $5.5 million and first quarter non-GAAP net income per share in the range of four to five cents per share based on approximately 108 million weighted average diluted shares outstanding.
Isabella: During the period for the full fiscal year 2026, we expect total revenue to be in the range of 686 million to $691 million, which represents a year over year growth rate of approximately 16% at the midpoint fiscal year 'twenty 'twenty six non-GAAP operating income is expected to be in the range of 25.5 to $29 5 million.
Isabella: At the midpoint. This implies a non-GAAP operating income margin of four percentage points, roughly a 400 basis point improvement versus fiscal year 'twenty 'twenty five in line with the annual margin expansion framework, we outlined at our Investor Day last September.
Isabella: We expect to remain operating income positive for the year inclusive of the proposed acquisition of offer fit the dilutive impact in fiscal year 2026 is likely to result in a temporary departure from the framework with a return to a more meaningful year over year operating income expansion next year.
Isabella: non-GAAP net income for fiscal year 'twenty 'twenty six is expected to be in the range of 34 million to $38 million and net income per share is expected to be 31 to 35 cents per share based on a full year weighted average diluted share count of approximately 110 million shares.
Isabella: I'll close by reiterating our excitement about Brazos future, we remain committed to becoming the global leader in customer engagement solutions and driving product innovation, while executing against our long term financial goals and with that we'll now open the call for questions. Operator, please begin the Q&A.
Isabella: We will now begin the Q&A session. If you would like to ask a question. Please use the raise hand feature at the bottom of your same window. Please limit yourself to one question.
Isabella: Oh wait one moment, while the queue assembles.
Speaker Change: Our first question comes from Ryan Macwilliams with Barclays. Please limit your audio and ask your question.
Speaker Change: Hey, congrats on the quarter and congrats to miles on a great run build let us see the brings technical brand refresh earlier. This week along with his announcement of the upper fifth acquisition look to hear more of the what offer fitbit add to your platform and how do you envision a agents.
Speaker Change: <unk> markings to paying for your customers in the near future I will followup. Thanks.
Speaker Change: Of course, so I think I'll just start at the top and break down the two major components that I think are necessary to understand the synergies behind this deal and you know the logic behind it and why we're so excited about it. So first when you look at offer fits existing full product offering, which they have been scaling and improving upon for the last four and a half years. It excels specifically at generating maximum up.
Speaker Change: Lift in scenarios, where even small differences in performance can translate into massive ROI for their customers are like Palin tier the openness and the configure ability of the offer fit system does lead to a requirement for expert assistance from there forward deployed machine learning implementation engineers and that is heavier upfront of course through initial implementation and then as the agents need monitoring or maintenance.
Speaker Change: Over time as the customer base changes or S performance starts to drift et cetera, and those expert teams are there to ensure that that maximum performance continues to be delivered and it achieves that uplift to a degree that you know as previously only possible with massive proprietary in house data science investments or into machine learning teams or other bespoke services.
Speaker Change: <unk> that come at much higher price tags, and so we're really excited about what that means for the high end of the market you know looking at our enterprise and our global strategic accounts categories in particular as well as other high scale B to C.
Speaker Change: Companies as they're scaling we also do believe that even as frontier AI technology continues to advance that there's there's always going to be use cases, we're achieving that maximum performance is worth that meaningful incremental investment and they built a capability to provide that to the top end of the market in a highly scalable fashion with an attractive gross margin, but we also believe that the underlying technology the offer fit engine.
Speaker Change: Can be tuned constrained to particular use cases to remove that need for the expert services attachment will still achieving meaningful performance uplift across a wide array of lifecycle marketing goals and so we're really excited in addition to continuing to build and scale the existing offer fit.
Speaker Change: Full product to work alongside their expert R&D teams to find new places to deploy their engine, that's going to be able to solve new use cases for customers as well as enhance existing aspects of both braids AI and the testing and personalization space and to extend the future capabilities of project catalyst.
Speaker Change: Excellent and then for Isabelle really tough time for Cfos at this point do the shifting macro any adjustments to your normal guidance philosophy, given the macro and any color on what in quarter of net retention look like for the fourth quarter. Thanks, Yeah. Thanks, So I would say look we've been living in this.
Speaker Change: Macro disruption and evolving environment for the last several years. So we're we've become used to the the changes. This is a bit of a new normal I would say that you know when we went into last year's guide I talked about being a little closer to the pen I think that philosophy will be maintained in this.
Speaker Change: Context to add so look for that to continue as a as a as a as a mantra that we espouse.
Speaker Change: And then on the in quarter a D. B N R. I look the I think the way to think about dollar based net retention, it's very sensitive obviously to the evolution of new business versus upsell and actually as you heard bill and I say in some of our prepared remarks, we're very satisfied and very pleased with the evolution of the new business.
Speaker Change: Our strength in in Q4, and some of the momentum there we're really focused actually on the total impact on revenue growth and I made some comments last quarter about revenue growth.
Speaker Change: Inflicting ahead of our dollar based net retention and we stand by those comments going into this year and so we're really excited about the overall momentum in the business.
Speaker Change: Appreciate the color. Thanks, so much.
Speaker Change: Our next question will come from the line of Arjun Bhatia with William Blair. Please go ahead.
Speaker Change: Yes perfect.
Arjun Bhatia: Thank you and congrats on a nice close to the year.
Speaker Change: Bill maybe first for you.
And then something in your prepared remarks that kind of stuck out I think new brands that is the next level of personalization.
Speaker Change: Beyond right message right channel right time, I don't know if that was her.
Speaker Change: Specifically addressed to offer that that's something break is trying to do in general, but what what is that next frontier personalization.
Speaker Change: How does that maybe change the nature of the messages if at all that youre, sending fewer customers beyond kind of traditional marketing oriented.
Speaker Change: Messages.
Speaker Change: I'll follow up after this.
Speaker Change: Yeah, So I think that there is.
It's important to think about all this on a spectrum and Theres a theres a few different ways to organize that spectrum, there's manually be testing and testing and instrumentation, which has obviously been possible and a lot of platforms for a long time and that does drive optimal it drives a higher results and more relevance and personalization for customers then you start to.
Speaker Change: Get to more automated experimentation like we've included and personalized path in canvas and we've spoken about in the past and that's using advanced machine learning our tactics in order to do more than just trying to optimize little bits of content, but actually look at a lot of the decisions that are made across a cross channel journey, that's communicating across different outgoing channels as well.
Speaker Change: Modifying product experiences and and experimenting with different things like cadence and tone and what have you and and then as we continue down that spectrum, we get two project catalyst, which is obviously working to encapsulate not just that experimentation in the automation around it but also automate more of the generation around the different experiment variance and expand.
Speaker Change: The scope of what the automated experimentation is able to make decisions on and then as we get further down and go back to some of the topics that I was just discussing in response to Ryan's question, you know where youre looking at fully customizable models and applying them in places where small differences in performance can lead to outsized outcomes and you see that in <unk>.
Speaker Change: Places, where there's either really high value actions or theres really expensive downside scenarios to avoid or youre, just operating at large enough scale that even basis points of improvement translated into really big dollars in our lives and I think that there is there are some other really exciting parts of this because as I stated before I think there's always going to be room at the top end of the market to apply that has.
Speaker Change: On data science expertise in order to achieve maximum performance, whether that's coming from your own in house data scientists or it's coming from a services offering like offer fits machine learning implementation engineers, but not all teams have access to those kinds of expert resources and similarly, it doesn't makes sense to deploy that high of a cost Bolton.
Speaker Change: Terms of the setup time, and a little literal dollars for the expert services in every little decision that gets made along the way through customer journeys and Brazos vision is really to enable customers to be able to comprehensively across a really diverse customer of space with companies of all sizes be able to go in and use the tools of artificial intelligence.
Speaker Change: So machine learning in order to optimize results and relevance for their customers.
Speaker Change: And and we want to make sure that that's accessible and able to be deployed in all the little detailed moments of the customer journey and we've spoken about that at length in the past I think that also another thing we've spoken about a lot is that the continued advance of frontier AI will continue to translate into improved performance for those fully self serve and rapidly deployed AI.
Speaker Change: Teachers like we have in the bracing I suite today and like I've spoken about before you know as we ourselves evolved from simple multi armband attesting to our a b testing to automated multi armband attesting to <unk>.
Speaker Change: Personalized path and these are all using subsequent generations of machine learning techniques in order to deliver better and better results, but I think one of the really great things about bringing together the current offer fit approach with the more accessible approach that Braves has been working on over the years is that is the feedback loop and the product feedback loop that comes with that so much like palin tiers have been able to build more.
Speaker Change: Quickly from the tight product feedback loop that they get from their forward deployed engineers offer fit has historically been able to more quickly improve their engine because they have a direct and highly skilled feedback channel coming from their machine learning implementation engineers and so we're looking forward to the future of brazen offer fit together being the best of all worlds as that same product feedback loop and frontier R&D, that's driving the high.
Speaker Change: And offer fit offering is leveraged throughout the rest of braze AI and in project catalyst.
Speaker Change: Okay perfect. That's helpful. Thank you and then one quick one sided customer cohorts I'm curious what you're seeing in terms of just expansion trends from.
Speaker Change: From some of the newer customer cohort. So you won whether that's that's that's greenfield point solution replaces the legacy providers. It seems like the new has been pretty strong, but when those customers are coming up for renewal or are you seeing expansion level. So that are better than that observed cohort and as a magnitude kind of changed at all from the nine points that we talked.
Speaker Change: About ethanol.
Speaker Change: Oh, sorry, okay, yes, so in the since we announced that sort of nine percentage point differential between those two cohorts that and that has continued to trend in a positive direction. So we're not going to kind of continue to disclose that that differential but it is it has continued to be that post deserve cohorts are.
Speaker Change: Performing better than the dessert cohorts so that trend continues.
Speaker Change: Alright Thats helpful. Thank you.
Speaker Change: Our next question comes from the line of D J Hynes with Canaccord.
Speaker Change: Hey, Thank you guys.
Speaker Change: Bill maybe you could go back to stick on the threat of other fit for a second let me explain the technology and the value prop very clearly maybe just speak to the business outcomes a little bit that you see for your customers that are already using offer fit today like do they send more messages is it just that the messages or more.
Speaker Change: Effective can they create content faster just help me understand kind of how it translates.
Speaker Change: From a revenue perspective to what grades might actually see.
Speaker Change: You kind of push off a bit more broadly across the customer base.
Speaker Change: Yeah. So I think that in terms of the performance that you see what you should expect is enhanced relevance and so there are parts of the opera fit offering that include automatic content generation. Those are very similar to the assistance in the helpers that or in the Braves composers today and in fact the.
Speaker Change: The Braves composer, a suite and the journey I assistance that accompany them are actually ahead of what offer fit offers today and we're excited to be able to.
Focus their R&D, where they've been specialized and have them be able to draft off of a lot of the other things that raise is built around its dashboard inclusive of things like reporting and those composers in the breeze data platform and our enterprise commissioning and just a lot of the other things that we built along the way that they'll be able to benefit from in and accelerate with we I think also when you look at that.
Speaker Change: [noise] of messages sent you know, we don't expect that to materially change. Although there are great examples where our win offer fit works with braids customers in particular, they often will start out optimizing for a single channel, but because the Braves is cross channel capability and the ease with which you can move strategies from channel to channel embrace it. It has promoted in our shared customers in the past them.
Speaker Change: Banding those offer fit use cases across other brands channels and so that's been really great to see and we certainly hope to continue to see that trend continue as that makes our customers stickier and helps with them, an upsell and cross sell across the board.
Speaker Change: And I think also I.
Speaker Change: The key differentiator when you think about the business.
Speaker Change: Impact in terms of what we sell and how we sell it I think is that offer fit because of the demonstrable performance uplift and really the focus on going into these extremely high value use cases has is in an extremely good position to value sell they they show incredible levels of ROI for their customers when they deploy them, they're able to maintain those high <unk>.
Speaker Change: Our performance through the attach of those machine learning implementation engineers and they're doing it at a value and scalability level that maintains really attractive gross margin. Despite the attachment of those expert services to the software offering that they're deploying yep yep, Okay very clear and then it's about what is the mix of cash and stock in that $325 million.
Speaker Change: Yeah. So it's a 42% equity in the balances are cash okay. Perfect. Thank you guys.
Gabriela Borges: Our next question will come from the line of Gabriela Borges with Goldman Sachs. Please go ahead.
Gabriela Borges: Hi, Good afternoon. Thank you bill it there's a little bit of a debate in the market right now on the advantages of being a SaaS native company investors and and at a company and you're staffing a company acquiring a company. So help us understand why could you not fill this in house.
Gabriela Borges: And what what are the limiting factors to offer fit being able to scale of being able to scale without creating to be acquired by price. Thank you.
Speaker Change: So I don't think in either of these cases. This was a cat both teams have highly capable engineering and product groups with you know really great R&D capability and are on great trajectories, but when we look at the synergies that we'll be able to achieve and the way that we'll be able to complement each other based off of where both both kind of a combination of where focus areas and.
Speaker Change: Also we're comprehensiveness has been in the past, we think that it's going to be a really fantastic coming together of the expertise and the experience that the offer fit primarily data science focused offering has had in the field. The work that they've done match much of which was with roughly about I referenced this in our prepared remarks, but almost.
Speaker Change: Third of their existing customers already worked with Grays and so it's something where we knew them well as a partner we could see the synergies that we'll be able to achieve together, we can see the improved customer outcomes that come out of us working together and we think that together, we can both move faster.
Speaker Change: That makes sense the follow up is far Isabelle specifically on demand trends that you've seen in the last couple of weeks. There's been so many next state of play in trial, that's on the consumer spending side or more broadly with uncertainty tied to the new administration have you seen any change and you got all leading indicators as it pertains to your cost.
Speaker Change: Domestic willing to spend in the last couple of weeks. So nothing specific in the last several weeks, we do recognize that the evolving.
Speaker Change: Global trends and specifically as you mentioned around some of the tactics of the new administration are going to create some challenges for some of our customers and our prospects, but and as we think about how pipeline is evolving how pipeline is behaving are the trends of whether it's linearity or just the amount of closed one through <unk> through Q1. So.
Speaker Change: <unk>.
Speaker Change: There's nothing that we're seeing that gives us pause on the immediate trends yeah. I'd also just add that on the technical side, we've obviously been anticipating national data sovereignty concerns continuing to rise and importance for a whole bunch of reasons, which is why we've been expanding our data center footprint, which now includes options in the U S. The EU and Australia, We've got Indonesia, launching relatively soon and we'll have more regions.
Speaker Change: To follow and so we're preparing ourselves in a variety of ways I think that the trend line of a lot of these things has certainly accelerated more recently, but it's pointed in a similar direction as it has been for years and we've been preparing for it.
Speaker Change: Thank you for the detail yet.
Speaker Change: Our next question comes from Brent Basin with Piper Sandler. Please go ahead.
Brent Basin: Thank you for taking the question here I wanted to stick with the macro a little surprise given retail and consumer goods are the largest vertical for you. Yet you still had really really strong CRP a backlog build in the quarter I think our bookings looks like it actually slightly accelerated bill could you just talk about.
Brent Basin: The feedback from from retail and consumer goods companies in light of tariffs and uncertainty there.
Brent Basin: Is it cost that are that they're leaning into Braves isn't it.
Brent Basin: Rigidity of old legacy platforms, and they need to be more flexible walk us through what's resonating in our increasingly mixed environment, then Isabelle if he could just touch on net new logo growth fear adds were the highest in the year and a half what drove that strength. Thanks.
Brent Basin: Yeah. So a few things first I'll point, you back to the high level of diversification that we have in the business. You know it is our largest category, but it's also still roughly only about a fifth and so in any given environment. I think we've had a strong ability to be able to leverage our diversification both around the globe as well as across categories in order to continue.
Brent Basin: To push ahead in new business, even as certain areas of the world or parts of the.
Brent Basin: Parts of the market had been impacted I think also you know one of the things that we've learned over the last couple of years in particular, when we're looking at the enterprise segment is that these enterprise replacement cycles are stickier and longer term and more considered then a lot of the short term noise that we look at and so I know you know, it's we we can here.
Brent Basin: Some of the short term responses to a to a lot of the things that are happening recently with tariffs and there's concerns about costs in there as you know things like that and Theres been versions of that happening is inflation and currency strength has ebbed and flowed over the course of the last couple of years, but I think that some of the things that underlie a lot of the legacy replacement cycles tend to be tied more to.
Brent Basin: The long term contract lengths of those legacy marketing cloud deployments the budget cycles. The team's coming into play you know there's rfps being run for all of these are replacements and so those arent things that just kind of waiver and get interrupted week by week. They tend to be more of a long standing and definitely a lot of the story of the <unk>.
Brent Basin: Last year and what we saw culminated in Q4, you know in the enterprise in particular was that these deals cycles do continue to be long. They continue to involve more stakeholders a much higher percentage of them go to RFP then used to in the past, there's less appetite for customers to pay for overlapping contracts in order to kind of go through migration periods and things like that.
Brent Basin: And so those are all things that make that legacy replacement cycle harder and makes it take longer to take more effort now on the flip side, we feel better about the competitive position that we're in against legacy marketing clouds than we ever have theres, obviously, a lot going on a lot of announcements coming out of the likes of Salesforce and Adobe, but it's very clear as well that the marketing.
Brent Basin: Loud the aspects of the experience cloud that we compete with are simply not the focus area of those businesses right now I think that more and more customers and their technology partners and their agency partners are starting to wake up to that and so that's starting to I think build more momentum around how people are thinking about the risks that are associated with sticking with the <unk>.
Brent Basin: The incumbents, even even though they might be in a risk averse posture and so you know that that's all against the backdrop that includes all of those other factors that I, just mentioned that or that is still making it difficult to execute in but I think we you know we feel really good about the investments that we've made over the last couple of years to put us in the position that we're in you know in the enterprise in particular and we're eager to.
Brent Basin: Continue to make progress in and take share in that enterprise spaces, especially against legacy American gods.
Brent Basin: And then Brian on your question on logo count and so I'll make three three comments to one.
Brent Basin: Q4 is generally a strong quarter for kind of tapping into new budgets and securing new logos. So that just generally Q4 can be a helpful kind of seasonal quarter. There. We did do better in this Q4 on logo churn. So that we had a little bit less of a headwind working against that so really happy with how that played out and what I will say is that there was.
Brent Basin: Nothing unnatural that happened in Q4 with regards to incentive structures or anything that would have driven like some sort of an odd one time pop in additional logos. So this is very much kind of core business performance.
Speaker Change: Helpful color and I'll Echo congrats to miles on a great run.
Speaker Change: Our next question will come from Brian Peterson with Raymond James.
Speaker Change: Oh, Hey, guys. Thanks for taking the question. So I appreciate all the commentary and congrats to the opposite acquisition you mentioned that with the deal fiscal year 'twenty six will be a year that will be a deviation from that growth margin framework you outlined at the analyst day is that dynamic solely due to offer fit.
Speaker Change: Or is there any organic investments that youre seeing are making because theres a product a growth opportunity would you love to just get your perspective there.
Speaker Change: Yeah. Thanks for the question if you go back to my organic.
Speaker Change: Our outlook for for the year. So we did provide guidance both for the quarter and for the full year and you look at the operating non-GAAP operating income dollars and that the implication of the margin relative to the revenue outlook that is consistent with the framework. So I did want to set that stage. The transaction has not closed yet but we are.
Speaker Change: <unk> that once the transaction does close and we provide updated guidance, we do want to set the stage and <unk>.
Speaker Change: Flagged to the market that there will be a deviation once we embed those costs.
Speaker Change: Isabelle just fall on the acquisition you mentioned a couple of points of revenue does that assume kind of a current run rate for offer fit or are there any incremental cross sell center is embedded into that yeah. I mean, that's obviously a bit of a it's a risk adjusted.
Speaker Change: Number so we're I think these these acquisitions, we want to be judicious about kind of how are how quickly we try to sort of achieve that end and we want to certainly get as much out of this transaction as possible as quickly as possible and be very successful, but that we're obviously risk adjusting that that number. So for now that is that is in fact, just at a run rate number for them.
Speaker Change: Understood. Thank you.
Speaker Change: Our next question comes from Derrick Wood with TD Cowen.
Speaker Change: Great. Thanks, Bill can you just give us a sense as to what organizational changes have transpired since miles announced his intention to step down and how we should be thinking about the timeline of bringing on a CRO and I guess since this is a Q1 are there any notable go to market changes that youre, making that you would flag.
Speaker Change: Yeah. So first of all the search is going well and I've been really happy with our field teams execution. During this transition period. So far through Q1 as we updated you guys on throughout last year. The last six quarters that brought in a lot of new field leaders around the world and we've got great global leaders across our partnership sales and post sales groups, who are long tenured Braves leaders who are in <unk>.
Speaker Change: And they presently report directly to me, but you know other than some of the changes that we spoke about throughout the year last year. There were no. Other major changes other than that reporting those reporting lines switching from miles to me as we began the year within that search you and we're looking for a world class executive to take on the CIO role who's going to help bring us to the next level.
Speaker Change: We're really focused on re achieving rule of 40 efficiency scaling too and then well beyond 1 billion in IRR and continuing to grow braze into the globally recognized leader in customer engagement and you know, we're just really focused on finding the leader across those field teams in that zero seat to help us do that as for timing where in market right now candidate flow has been great.
Speaker Change: It's definitely a highly sought after role and definitely a seat that you know miles really shaped really well over the course of a decade and one that we've got a lot of really robust candidate flow that is excited for the opportunity to step into that.
Speaker Change: Great if I could squeeze one and a follow up just on a few quarters ago, you talked about that potentially changing pricing strategy with Whatsapp I don't know is there any updates to call out there I know it could have some impact on the P&L for you guys. Just wondering if you've seen anything down the pike.
Speaker Change: Yeah.
It's a good question, we continue to partner closely with meta and are committed to both robust and rapid support for everything that they've been watching along the way as well as a number of their test programs that they run them. However that landscape also does continue to change rapidly you may have heard about met his decision to discontinue marketing messages and whatsapp for U S customers recently that doesn't impact us.
Speaker Change: Very much commercially because the vast majority of our global demand for Whatsapp was already nonhuman audiences, but it is another example of just how dynamic that offering and pricing landscape has been for meta as their quick later quickly iterating on their product that impacts both us and our roadmaps as well as customers who need to plan out budget to be able to use for these different offerings and so I'm definitely.
Speaker Change: Well that remains dynamic it will be much harder both for customers, so forecast and budget as well as for us to forecast now, what's helping customers and us navigate. This is that we are in a much better position to manage these changes with the flexible credits model that we launched last year and obviously your Brazos product offering is highly flexible given the the cross channel offerings that we have.
Speaker Change: Across line in Rcs, and SMS and push notifications and these others in particular, you know as their product roadmap continues to evolve we're able to reuse a lot of the capabilities that we build out for other channels and so you know I don't think it's been really a drag on R&D velocity at all but you know definitely while it continues to be a dynamic offering it has been harder for <unk>.
Speaker Change: Customers to plan for that and we've been working really closely with meta in order to bring them feedback and work closely with them as partners and we've been really happy with how that partnership has been going as they've continued to iterate the product, but it's still hard to forecast out a long way into the future as we look at that channel.
Speaker Change: Understood. Thanks for the color Thanks Yep.
Speaker Change: As a reminder, please limit yourself to one question.
Speaker Change: Our next question comes from Nick Altmann with Scotiabank. Please go ahead.
Speaker Change: Awesome. Thank you.
Speaker Change: It's clear, there's still plenty of opportunity for consolidation and replacement activity, but bill maybe you know how should we see this acquisition of offer fed as well as additional product efforts, whether it's project catalyst or a future new product features are launches as we think about kind of the next growth Act for Braze you know.
Speaker Change: Just maybe give us an update and kind of how you envision the platform evolving over the next couple of years and how that can support continued growth durability. Thanks.
Speaker Change: Yeah of course.
Speaker Change: No. We're really excited about the potential for these because as I spoke about at the top of the call you know well.
Speaker Change: Well the technology that we have at our fingertips for customer engagement today has certainly head and shoulders above where it was five years ago 10 years ago, even even just a couple of years ago. There's also still tremendous amount of room, a tremendous amount of room for continued improvement in terms of the relevance and the.
Speaker Change: Just the performance that we actually achieve in these channels and it also continues to be the case that the ROI of engaging in first party channels of leveraging the first party data that a brand already has ownership of a which is.
Speaker Change: An asset that brands across every vertical continue to put more and more investment in that that opportunity to create outsized value and return from continuing to optimize more of the first party world in much the same way that a lot of the performance marketing World has been really focused on for a long time, we think there's still a tremendous opportunity to continue to fall.
Speaker Change: And more leverage in performance, there and I think both project catalyst as well as offer fit is a really great way for us to both help our customers achieve that continued those continued increases in performance driven by higher levels of relevance and stronger more effective personalization, but also for us to capture more of the value of that that we generate through that optimization and so you know where.
Speaker Change: Definitely when we look out across our customer base, you know I think that across that spectrum I spoke of earlier of the fully turnkey rapid rapidly deployed automated testing and other sorts of machine learning capabilities that can be put into any part of the customer journey all the way up to the bespoke full offer fit offering that has the expert serve.
Speaker Change: This is attachment to it within that spectrum, we think that there is something additional for every single customer in the brace universe to be able to go and drive additional better outcomes for their customers and also be able to drive upsell growth for brace.
Speaker Change: Great. Thank you.
Speaker Change: Our next question will come from Scott Berg with Needham. Please go ahead.
Scott Berg: Hi, everyone really nice quarter I guess the one for me is is bill you talked about the vertical focus in R&D and of course, the new shop.
Scott Berg: With the integration there, but how do we think about the benefit that your customers are going to get outside of maybe just streamlining the technology side of that that integration is there.
Scott Berg: How else does it affect I don't know.
Scott Berg: Juice sales cycles, you know all those types of things how much more additional that you felt comfortable.
Scott Berg: Yeah, I think Theres a few things first a lot of these capabilities are there.
Scott Berg: <unk> on getting more rapid time to value for customers, both as they get up and running in the first place as well as as they expand into new use cases, the data model expansions that we have in a lot of the kind of <unk>.
Scott Berg: <unk> vertical specific capabilities that we're putting in places like product catalogs within the segmentation options within things like the purchase object et cetera, those have a dual benefit where they both by virtue of getting those more organized and standardized customers can actually deploy more quickly, but they also make the machine learning efforts that we have had.
Scott Berg: Turning in braids I raise AI able to be more effective as well because we're able to get the data into more standardized formats, where we're then able to deploy models that are as I mentioned before when a model is more constrained it's easier to deploy them that doesn't mean, it's less flexible but of course, the more that we can standardize the data models around specific verticals the mall.
Scott Berg: More use cases, we can actually we can actually accomplish and deliver additional value to through those more constrained models and so you should see these things as working hand in hand to both improve the offering the visibility of the offering within those categories that the time to value for our customers in those categories working with res.
Scott Berg: Getting up and running with Grays and then over the longer term you know those deployments being able to because theyre more bespoke to the vertical us being able to then parlay that into additional features and enhancements that are both driven by stronger machine learning models, but also just improving productivity for marketers that work within those categories.
For all the common use cases that they have.
Scott Berg: Very helpful. Congrats on nice quarter again, yes. Thank you.
Speaker Change: Our next.
Scott Berg: Okay.
Scott Berg: Yes.
Scott Berg: Terry can you Star 628.
Scott Berg: Okay.
Scott Berg: Okay can you guys hear me now.
Scott Berg: Yep.
Scott Berg: Yeah, Okay awesome perfect. Thanks, so much for taking the question is about.
Speaker Change: When I hear like an inflection in growth that sounds like a potential acceleration. So I guess could you just talk about what you are seeing in terms of either you know renewal trends or expansion activity, that's giving you comfort in that outlook and now that you know we're a couple months into this one Q I guess any thoughts in terms of timing.
Scott Berg: And when we could get past some of these more challenged co bid contracts.
Scott Berg: Yeah, so rather than thinking about it is on an organic basis as any kind of sort of inflection in reacceleration I. It's more of kind of a stabilization with then kind of a slow steady path kind of back up from there. So it's not don't think about this as kind of a hockey stick on on the upside and and I think what we're seeing is.
Scott Berg: As you know we were seeing strength in our new business momentum.
Scott Berg: And then we are seeing obviously, the new cohorts from an expansion perspective, performing better than deserve cohorts and I think those two things combined together are going to help us kind of achieve that stabilization inflection point and then I.
Scott Berg: Steady reacceleration of of out of the top line on an organic basis, and but I I'm not trying to indicate that there is a hockey stick in flight inflection point happening in the near term.
Scott Berg: Thank you so much.
Michael Barrett: Our next question will come from Michael Barrett with Wells Fargo.
Speaker Change: Hey, congrats on the correlation for taking my question I have another one for his ago, but this time in relation to project catalyst.
Speaker Change: Notice that it's likely to come out later this latest quarter next quarter. So I'm curious how to think about what's embedded in the guidance in terms of.
Speaker Change: Project catalyst contribution and has that changed or.
Speaker Change: As a wager thought about the product contribution changed post.
Speaker Change: Acquisition here. Thank you yeah. So obviously be that guide them on an organic basis doesn't include it doesn't include offer fed interest includes kind of our our own our own business.
Speaker Change: And I don't think catalysts is going to be a quite as quickly as you're as you're indicating yeah. As I said in the prepared remarks. The first private beta release will be at the end of Q1, and we expect subsequent beta releases before RGA and Theres been nothing said about when it goes out yeah, yeah. So I wouldn't expect anything material.
Speaker Change: Related to that are embedded in the guide or you know coming up coming anytime soon.
Speaker Change: Got it and then a quick follow up for Bill here, you know that Europe is the best you felt in the competitive landscape here. Some of your key legacy competitors talked about their core products competitive products underperforming.
Speaker Change: Created in board discussions are more uptick in top of funnel activity today.
Speaker Change: Or how can we think about.
Speaker Change: The change in competitive landscape, taking shape for you guys.
Speaker Change: Yeah, So I've been talking about this for a little while now and I think that the.
Speaker Change: I'll call it the kind of distracted our posture towards the competitive products within our like the parts of the legacy marketing clouds. The brace competes with AR has been picked up on by the broader community and that has a few implications. One is that we're seeing partners that have been long time, you know services, our technology partners to those marketing clouds.
Speaker Change: Starting to look around and figure out what their next act is going to be in sprays emerges as the category leader in customer engagement, we're having a lot more of those conversations with prospective or current partners about doubling down on their commitment to raise I think also you know theres been a lot of enterprises in particular that I have have really been you know they've they've been looking for.
Speaker Change: Our word to our product roadmap from those capabilities. They may be have been noticing the gap between what they'd like to have and what the legacy marketing clouds are delivering to them for a while but the product marketing around it and you know their prospective future roadmaps have felt really good and they've been holding on hoping that those promises will come true in the near future and now I think it's becoming increasingly clear to us.
Speaker Change: People that those products are more stagnant then they are really pushing ahead and in the meantime, braised continues to push ahead into new frontiers with highly focused and robust R&D specifically in the customer engagement space and so when we consider both the absolute positioning as well as the relative investment posture I.
Speaker Change: I think that we feel really good about that and I think the ecosystem starting to notice that as well.
Speaker Change: Awesome. Thank you.
Speaker Change: Our next question comes from Brian Schwartz with Oppenheimer.
Hi, Thanks.
Speaker Change: Well one of them.
Speaker Change: Thank you.
Speaker Change: The integration with the architecture plans.
Speaker Change: Perfect. Thank you.
Speaker Change: You mentioned that that they have a different data model that raise as you'd think about scaling raisins architecture.
Speaker Change: In the future is the plan to get back to one tech stack.
Speaker Change: Sure.
Speaker Change: Or is it faster to scale by adding other types of attacks.
Speaker Change: And by your future avenues.
Speaker Change: Yeah. So I think that an enduring advantage that we've had against the prior generation of marketing clouds and marketing automation suites is actually derived from the tight integration that we have across our stack as well as obviously the event driven stream processor that underlies all of it and then you know the increasing flexibility of the breeze data platform to be.
Speaker Change: Able to get more data more quickly completely and cheaply into that event driven stream processor and so any acquisition that we make along the way is absolutely going to be predicated on a strong integration plan, where we bring those technology stacks together I'm very committed to braze, not ending up being a fragmented set of acquisitions with a bunch of.
Speaker Change: The complexity that's inherent in that you know, we're really looking forward to offer fit you know coming into the Braves technical environment in the foundations and us being able to leverage their engine in them being able to leverage a lot of the things that we've built along the way.
Speaker Change: When you specifically look at the data question, you know a big part of extracting additional uplift through the way that they apply there.
Speaker Change: That they generate their features and apply their reinforcement learning to it is actually activating bespoke company or industry specific data across both the customer feature space, which is to say you know kind of all the data that you have on your on first party users across the user profiles as well as the action feature space, which is a which basically means like.
Speaker Change: All of the different Optionality that you have to make different offers provide different incentives different copy different choices that you have along the along the customer journey and so bringing in both of those flows in a bespoke way I'm. Also then requires transforming those incoming data flows to extract features that are usable for machine learning it involves navigate.
Speaker Change: Regulatory and other requirements, especially in places where they work like in finance and they bring a lot of hands on experience in that area. So now on the other side too we're excited to speed up their roadmap because of the Braves data platform is a more comprehensive data platform with more connectors are already built than they've already created on their side.
Speaker Change: And that ends up being very complementary because they really work to make their data pipeline specifically for that transformation into features for usage by machine learning and to adhere to a lot of those regulatory requirements in particular in the high end of the enterprise in these highly regulated environments. The Braves data platform has built to be a comprehensive solution.
Speaker Change: Ross across the BDC space to be able to get data into our customer engagement stack, you know quickly completely and cheaply and we think that there is just really good synergies there as we continue to build but we are very committed to making sure that the end state and indeed, one that we get to rapidly as one where the integration is tight so that we can both benefit.
Speaker Change: From continued R&D advancement that builds without incurring the flex a bit or the without incurring the complexity that arises from more fragmented technology.
Speaker Change: Thanks.
Yun Kim: Our next question comes from Yun, Kim with loop capital.
Yun Kim: Okay, great Congrats on the solid quarter, Bill and Isabelle strengths into new customer adds that you signed a quarter any new bundles.
Yun Kim: Bundles aren't packaging, that's driving that drove that strength.
Yun Kim: If you can update us on how the initial land deal size has been trending.
Yun Kim: Yeah, So we only update our pricing and packaging meaningfully once a year and a refresh for that will actually be coming up as we begin Q2, I'd also remind everyone that we launched the flexible credits model around.
Yun Kim: Around this time last year and the adoption of that has been really good but we had limited it to just a couple of channels and so we've actually in this upcoming in this upcoming version or a refresh of our pricing and packaging, we're gonna be expanding the flexible credits model to also include email contact cards banners audience, Inc, and message archiving and so.
Yun Kim: So you know that we're excited about that and continuing to see good benefits from that and obviously, we did see the benefits of that flexible credits model being there in Q4, I think that you know similarly, where we're continuing to see the kinds of buying trends that I've spoken about a lot of just you know theres a lot of scrutiny and rigor behind all of these.
Yun Kim: That are happening I and the upsides of that are that people are scoping their purchases in ways that theyre getting up and up and running more quickly and more completely through their initial integration because they've got stakeholders. All line before they're ready to go on a lot of these rfps are drawn out which has the downside of it being a longer sales cycle, but has the upside of more often.
Yun Kim: The company is ready to go for implementation right away and so I think those are some of the differences that we're seeing it's not materially different in Q4 versus the rest of the year, but you know obviously, we were happy with the new business performance in the quarter.
Speaker Change: Okay, great. Thank you so much.
Speaker Change: Our next question comes from Patrick Wall Ravens with JMP Securities.
Speaker Change: Patrick Your line is open for Frito on mute.
Speaker Change: Sorry about that can you hear me now.
Speaker Change: Please go ahead, okay. Good. Thank you Hey, Bill I'm curious on anchor fit why now like was there a formal process that they were going through them.
Speaker Change: Were they considering doing it a new financing how long have you been thinking about this why did this deal happened now yes.
Speaker Change: Yes, I won't go into too many of the details, but just quickly you know we we have a active Corp Dev Act.
Speaker Change: Active Corp. Dev group here. This was identified as an area of interest for US offer fit has been a longtime partner as I've mentioned, a couple of times a braces actually their most prominent partner and we've been really happy with seeing the joint customer outcomes that we've been able to achieve with them along the way and so we actually did approach them. We happened to approach them right as they were preparing for a fundraising Rao.
Speaker Change: And so that did put some constraints around the overall timeline, but you know a big part of this is just that we've seen them maturing as a business in our partnership ecosystem I and we felt like there was a this was a great time for our complementary building. We I've mentioned a couple of times the things that they built the things that we felt that the.
Speaker Change: Flip side of that is also the things that they haven't built yet and the things that you know, where we havent built yet as well and I think those things match up in a way that's going to create not just an exciting combination, but also really efficient one.
Speaker Change: Alright, great. Thank you.
Speaker Change: We'll take our final question from Tyler Radke with Citi.
Tyler Radke: Hi thinks of it.
Tyler Radke: It was about like you mentioned that you did a little bit better on the churn I was wondering if you could expand on that and share an update on the health of the SMB market.
Tyler Radke: Yeah, I mean look yes.
Tyler Radke: The one thing about churning an account is once you've turned it you can't turn it again and so we've had a few quarters now where we've been talking about levels of turn that have been higher than what we would want on a sustained basis and we're starting to kind of work our way through that now there are worth probably still not all the way through some level.
Tyler Radke: Of right contract right sizing among some of our customers who will stick around that we'll have to kind of rightsize their entitlements are as they come up for renewal.
Tyler Radke: But that said you know we've we have indeed flushed out in a number of smaller accounts that are that whose business health was certainly at risk.
Tyler Radke: Thank you.
Tyler Radke: There are no more questions in the queue. So I'll pass back to bill for closing remarks.
Bill: Yes. Thank you everybody for joining us today, we are obviously really exciting news today and really happy with the execution from the team around the world. We're looking ahead to a great fiscal year and we'll see you next quarter.