BRZE - NASDAQ

Welcome to the Braze First Quarter Fiscal Year 2024 Earnings Conference Call. My name is Anne and I will be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, we will conduct a question-and-answer session. I will now turn the call over to Christopher Ferris, Head of Braze Investor Relations.

Thank you, operator. Good afternoon and thank you for joining us today to review Braze's results for the fiscal first quarter 2024. I'm joined by our Co-Founder and Chief Executive Officer, Bill Magnusson; and our Chief Financial Officer, Isabelle Winkles. We announced our results in a press release issued after the market closed today. Please refer to the Investor Relations section of our website at investors.braze.com for more information and a supplemental presentation related to today's earnings announcement. During this call, we will make statements related to our business that are forward-looking under the 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 second quarter ended July 31, 2023 and for our fiscal year ended January 31, 2024, our planned product and feature development and the benefits to us and our customers therefrom, including our AI features, the potential impact and duration of current macroeconomic trends, our anticipated customer behaviors including vendor consolidation trends and their impact on Braze and our long-term financial targets and goals, including the anticipated period in which we may generate positive non-GAAP operating income, and positive free cash flow. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements. For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and our SEC filings, both available on the Investor Relations section of our website. I'd also like to remind you that today's call will include certain non-GAAP financial measures used by management to evaluate our ongoing operations and to aid investors in further understanding the company's fiscal first quarter 2024 performance in addition to the impact these items have on the financial results. Please refer to the reconciliations of our non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with 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. And now I'd like to turn the call over to Bill.

Thank you, Chris, and good afternoon, everyone We're very pleased with our first quarter performance, which again demonstrated the power of the Braze customer engagement platform, even against the challenging macroeconomic background. We got off to a great start to the year, generating $101.8 million in revenue, up 31% versus the prior year, while driving operating efficiency in the business. Non-GAAP gross margins increased 100 basis points year-over-year and we demonstrated strong leverage with non-GAAP operating margins improving by over 700 basis points compared to the first quarter of last year. We also generated record free cash flow of $21.7 million, driven in part by solid fourth quarter bookings. As we progress through fiscal 2024, we plan to continue driving strong top-line growth while maintaining cost discipline and believe we are well on our way to achieving the near and long-term profitability goals outlined on our fourth quarter call in March. Brands continue to recognize the high ROI that can be achieved through personalized cross-channel customer engagement enabled by the Braze platform. In the first quarter, we increased our total customer count by 96 sequentially to a total of 1,866 continuing to win against both legacy Marketing Clouds and Point Solutions with our best-in-class customer engagement platform. Recent new business wins and upsells included Procore Technologies, Sonos, Sweetgreen, and Swimply, among many others. We continue to realize strong growth across multiple customer classes, geographies and verticals with both retail e-commerce and media and entertainment showing particularly strong year-over-year growth during the period. Braze again benefited from vendor consolidation this quarter and we believe this trend will continue as enterprises with ambition and sophistication consolidate our technology ecosystem with modern omnichannel customer engagement solutions like Braze. We further believe that both the legacy replacement cycle and this vendor consolidation trend will accelerate as customers look to capitalize on new AI-driven advancements in customer engagement, an area of innovation, which benefits tremendously from the breadth of Braze's data footprint and messaging flexibility, as well as our real-time stream processing architecture. As I mentioned on our fourth quarter earnings call, existing at the leading edge of technology is in our DNA and at the core of our innovation roadmap. Braze is a company that perceives the opportunity presented by the coming wide-scale adoption of mobile more than a decade ago. And since then we've worked relentlessly to seize that opportunity through the use of sophisticated technology. For years Braze's had dedicated teams of data engineers and data scientists, focused on using machine learning to build AI into our product, with the goal of making marketers more effective and engaging their end users by optimizing customer journeys, generating more relevant content and enhancing targeting strategies. Even more importantly, we believe that the ability to use machine learning and generative AI are as fundamental to being a software engineer as using databases and writing secure code. As new technologies emerge, including but not limited to breakthroughs in artificial intelligence, our forward-looking R&D posture and highly extensible foundations allow us to quickly deliver innovation to our customers. You can see this track record in not only our long history of activating real-time first-party data through stream processing, but also with AI, including generative AI more recently. Braze debuted a GPT integration for email subject line generation over a year ago and we were early to integrate generative AI for images into the message composition experience, launching a dashboard integration with Dolly last December. More recently, we launched a message content checking tool, built on top of GPT4, helping marketers to avoid copyrighting mistakes, the accidental sending of text messages or sending culturally insensitive content. We're also testing a wide array of new capabilities including generating SQL for advanced segmentation and reporting use cases, automatically suggesting improvements to message copy during composition and even an adversarial AB testing simulator that we believe may be able to generate and predict winning message variants for populations before a campaign is even launched. Customers have been successfully using both our AI copyrighting assistant and automatic image generation for months to generate message content and inspire new engagement strategies. Lowering the burden of content creation while also serving as an in dashboard news encourages customers to bring new use cases into Braze more quickly, while also expanding their usage of the powerful experimentation features native to Canvas, our proprietary, no-code visual development environment. We believe this enhanced agility and reduce burden to test new ideas, further combines with our other machine learning driven experiment optimization capabilities, further compounding the ROI we deliver to our customers. We know from our customer base that even small or one person teams can still accomplish a lot with Braze and as a company that has never charged for seats, we expect to see generative AI-driven productivity enhancements for individual marketers translate into even more Braze usage over time. We believe this will further cement our stickiness and promote expansion into new user populations, driving higher message volumes and the adoption of more channels. Internally, we talk a lot about smoothing the on-ramp into Braze as a key part of ensuring that the differentiation presented by Braze's sophisticated capabilities remains broadly accessible to our ever-growing market, even to those who are early in their journey of adopting the modern practice of customer engagement. Over the last five years, we've seen an acceleration of two trends that highlight the importance of tackling this challenge, which also translates into a deeper moat for Braze's technology and our customer community. First is the rising imperative of collecting first-party data and making it available in real-time to engagement systems. And second is the increased ROI of tightly coordinating customer engagement with the product journey, often including the delivery of messaging directly inside the product experience. Both of these trends mean that the customer engagement professional who expands their traditional marketing skill set to include a deeper understanding of data analysis, product design and basic coding will find themselves generating higher ROI for their brand and advancing more quickly in their career. Braze's customer education and community investments are designed to help more marketers make this transition and we believe that the integration of generative AI into our platform and the pairing of AI with our Canvas environment more broadly will compound these efforts by further smoothing the on-ramp into Braze for our new customers, while encouraging the use of our advanced targeting personalization and experimentation capabilities for those that are already familiar with Braze. All of this is a continuation of a central principle of our product strategy, which is that immense value can be created when you place the power of programmability and data directly into the hands of those who are closest to the customer journey and brand promise. It's why we built Canvas and it's why we continue to view it with not only additional power and flexibility but also with enhanced usability and collaboration tools. And of course, generative AI isn't the whole story. Preceding these features has been a robust collection of automated decision-making techniques, using both machine learning and advanced statistical methods, including our Predictive Suite, Intelligence suite and a personalized varying capability integrated into the Canvas. Some of these features are already monetized directly through premium add-ons, while others are provided as part of our standard offering, a blended approach that we anticipate continuing as we release more AI features over time. All of these capabilities are integrated deeply into Braze's data flow and execution SAC, and represent early examples of what we believe will be an area of enduring differentiation for Braze. Underlying them is our differentiated architecture which distinguishes Braze from our competitors in three key ways. First is our comprehensive data flow and messaging capabilities. Last fiscal year, Braze processed over 13 trillion data points and sent over 2 trillion messages, all with our real-time stream processor. Customer data flows into Braze across our customer's data ecosystems, inclusive of direct integrations into their products and their data warehouses. We are also integrated into a wide array of consumer touchpoints and end user product interfaces, which enables us to take action across many channels. The inputs AI and the direct outputs from its decisions are both more flexible and comprehensive with Braze and the added value this represents is a key component of our ongoing success with vendor consolidation. Next is real-time execution. Our ability to ingest and act on newly generated data in real-time means that AI and Braze is able to make better decisions faster. Braze already employs multiple machine learning and statistical methods to enable automated decision-making in real-time within Canvas and we're experimenting with custom transformers for automated product recommendation that will be able to inject the outputs of generative AI into message content on a per user basis. Third is our focus on experimentation and programmability. Building on Canvas's flexibility and strengthening experimentation, we'll continue injecting both AI/ML and statistical techniques for automated decision-making into an increasing number of decision points throughout the user journey, enabling new AI techniques to be tested against existing manual strategies and again subsequent enhancement to our AI-driven methods. It's an incredibly exciting time to be leading a team as innovative as Braze in a market with as much potential as customer engagement. And even as we approach our 12-year anniversary this summer, it still feels like we're just getting started. Before I turn it over to Isabelle, I'd like to note that on June 1, we closed the acquisition of North Star, our exclusive reseller of Braze technology in Australia and New

Thank you, Bill, and thank you, everyone, for joining us today. As Bill mentioned, we reported a strong first quarter with revenue up 31% year-over-year to $101.8 million. This was driven by a combination of existing customer contract expansion, renewals and new business. Our subscription revenue remains the primary component of our total top-line, contributing 95% of our first quarter revenue. The remaining 5% represents a combination of one-time configuration and onboarding fees as well as other recurring professional services. Total customer count increased 24% year-over-year to 1,866 customers as of April 30, up 363 from the same period last year and up 96 from the prior quarter. Our total number of large customers, which we define as those spending at least $500,000 annually, grew 27% year-over-year to 164 and as of April 30, contributed 57% to our total ARR compared to a 54% contribution as of the same quarter last year. Compared to last quarter, this reflects a 5% increase from 156 large customers that contributed 57% of our total ARR as of January 31. Measured across all customers, dollar-based net retention was 122%, while dollar-based net retention for large customers was 124%. Expansion was broadly distributed across industries and geographic regions. Revenue outside the U.S. contributed 43% of our total revenue in the first quarter, in line with the prior quarter. In the first quarter, our total remaining performance obligation was $478 million, up 22% year-over-year and up 5% sequentially. Current RPO was $325 million, up 28% year-over-year and up 4% sequentially. The year-over-year increases were driven by contract renewals and upsells and the signing of new customer contracts. Overall dollar-weighted contract length remains at approximately two years. Non-GAAP gross profit in the quarter was $70 million, representing a non-GAAP gross margin of 68.8%. This compares to a non-GAAP gross profit of $52.5 million and non-GAAP gross margin of 67.8% in the first quarter of last year. The 100 basis point year-over-year margin improvement was driven by ongoing efficiencies related to personnel costs and continued economies of scale in our core technology expenses. Non-GAAP sales and marketing expense was $49.3 million or 48% of revenue compared to $40.2 million or 52% 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 organization. Non-GAAP R&D expense was $19.6 million or 19% of revenue compared to $15.3 million or 20% of revenue in the prior year quarter. The dollar increase was primarily driven by increased headcount costs to support the expansion of our existing offerings as well as to develop new products and features to drive growth. Non-GAAP G&A expense was $17.1 million or 17% of revenue compared to $15 million or 19% of revenue in the prior year quarter. The dollar increase was driven by investments to support our overall company growth, including headcount costs and increases in software subscription and licenses. Non-GAAP operating loss was $16 million compared to a non-GAAP operating loss of $18 million in the prior year quarter. Non-GAAP net loss attributable to Braze shareholders in the quarter was $12.6 million or a loss of $0.13 per share compared to a loss of $17.7 million or a loss of $0.19 per share in the prior year quarter. Now turning to the balance sheet and cash flow statement. We ended the quarter with $507.4 million in cash, cash equivalents, restricted cash and marketable securities. Cash provided by operations during the quarter was $22.5 million compared to $17.9 million in the prior year quarter, driven by improved operating efficiencies, including improved spend management. While we reiterate that we expect our cash flow to fluctuate from quarter to quarter given the timing of customer and vendor payments, we note that this was the first period in which we delivered two consecutive quarters of positive operating cash flow, reflecting continued improvements in operating efficiency. Taking into consideration, the cash impact of capitalized costs, we generated $21.7 million of positive free cash flow compared to $15.7 million generated in the year ago quarter. Before I turn to the forecast, I'd like to make a few brief comments regarding Braze's application of AI and ML capabilities to internal productivity and efficiency. Beyond product use cases, Braze is rapidly experimenting with AI and ML capabilities throughout the organization via projects designed to shorten ramp times, improved productivity and streamline processes. Projects are in flight using both custom large language models and GPT4 via OpenAI's APIs to serve as co-pilots to our sales, solution consulting and post-sales teams, including an exciting project focused on customer support, which we believe will increase productivity and decrease enablement needs by improving discovery and automating research across our comprehensive public facing documentation and internal knowledge base. Across G&A functions, we believe there is a significant opportunity to use intelligent automation with machine learning in areas such as forecasting, human resources, accounting operations and internal audit. We will continue to implement and explore automation and AI/ML capabilities to complement decision-making and drive operational efficiencies. And now turning to our forecast. We are off to a strong start in fiscal 2024 and interest in high quality customer engagement solutions remained strong. However, the broader macroeconomic environment remains challenging and as such, our guidance continues to assume the current macro environment persist through fiscal 2024. We intend to maintain cost discipline and reiterate comments made during our Q4 earnings call that we believe we are well positioned to achieve a non-GAAP operating margin of better than negative 7% in Q4 of this year. For the second quarter, we expect revenue to be in the range of $108 million to $109 million, which represents a year-over-year growth rate of approximately 26% at the midpoint. This includes a $1 million contribution from our acquisition of North Star which closed on June 1. For the second quarter, non-GAAP operating loss is expected to be in the range of $15 million to $16 million. Second quarter non-GAAP net loss is expected to be $13 million to $14 million. And second quarter non-GAAP net loss per share in the range of $0.13 to $0.14 per share, based on approximately 97.4 million weighted average basic shares outstanding during the period. For the full fiscal year 2024, we expect total revenue to be in the range of $442.5 million to $446.5 million, which represents a year-over-year growth rate of approximately 25% at the midpoint. As a reminder, we expect our North Star acquisition to add less than 2% to fiscal year '24 revenue and our updated full-year guidance includes a $4 million contribution from North Star. Fiscal year 2024 non-GAAP operating loss is expected to be in the range of $54 million to $58 million. Non-GAAP net loss for the same period is expected to be in the range of $50 million to $54 million. Fiscal year 2024 non-GAAP net loss per share is expected to be $0.51 to $0.55 per share based on a full year weighted average basic share count of approximately 97.8 million shares. Our commitment to growing the top line while improving operating income and free cash flow margins remains unchanged. We reiterate that we expect Braze will achieve positive quarterly non-GAAP operating income and positive quarterly free cash flow by the end of fiscal year ended January 31, 2025. We are very excited about Braze's future. We're focused on growing our business and delivering best-in-class customer engagement at scale while effectively managing costs to achieve our long-term financial targets. And with that, we'll now open the call for questions. Operator, please begin the Q&A.

[Operator Instructions] Our first question comes from Ryan MacWilliams from Barclays. Please unmute your audio and ask your question.

Thanks for taking the question. Bill, how do you think generative AI real-time streaming processing more important in marketing campaigns. And any early signs on how generative AI could impact the number of interactions on your platform. Thank you.

Yes, absolutely. And I spoke about this last quarter and it's one of the areas that I'm most excited about because of the way that it lowers the creative and content production burden and allows for more and more people to take advantage of the differentiated capabilities that we bring to bear through Canvas. And it's just generally pushing people in the direction toward more modern customer engagement. So we've been really excited to see the early adoption of generative AI features that we've had in the product for a while. We're seeing more and more customers discover these products, try them out, when they tried them, they're using them. They're moving content suggestions, textual an image-based directly into production campaigns. We are also promising feedback from our GPT4 driven content checking tool, including a marketer sharing with us that it gave them the confidence to move faster because it provides a robust copyrighting capability without having an individual that would actually provide that on their team. And with respect to pre-existing AI/ML features, these are widely used across our customer base, including through our Canvas. And I'd wager that many of our customers using them don't know that there's a machine learning going on under the hood for some of them and I think that's a great thing. We only call things AI until they fade into the background. And we're going to stay focused on the job that our customers have to do, deploying AI where it's most relevant and making sure that we're going to hold our product innovation to a high standard by rigorously field testing, new techniques as we conceptualize them. We're also really excited about some of the second order effects that this is going to cause and I can dig into those as people ask additional questions. But I think, when you look at it with respect to competition, when you look at the point I've made about Braze having a broad spectrum of both inputs and a flexible set of outputs, and I think if you think about what it takes to really fully leverage the automated decision-making capabilities, you need to have a full data picture that needs to be inclusive of the users historical behavior, their attributes, the evolving context around them as they either move through their own lives or the product journey they're having with your brand and you need to have the ability to quickly take action when the insights that are generated from that data, point you in a new direction. You want to nudge them toward taking a new high-value action. You want to try to avoid a bad outcome like churn or them drifting away. You want to move them to the next stage of their user journey or have them discover some new feature that's going to improve their stickiness. And you need to be able to process and understand those moments that matter and then immediately capitalize on them that are taking the right action. And I think when you look at whether it's a point solution competitor that's simply not there and all the moments that matter and has a destroying look at the data picture or you look at the legacy marketing clouds who suffer from destroying channel by channel architectures which inhibit cross channel use cases even today. And we know that their batch oriented data or architectures limit their ability to deliver real-time experiences. And that new reality is creating an even higher opportunity costs for companies who are remaining either on the legacy marketing clouds or continuing to use siloed point solutions. We believe that in order to take full advantage of what AI has to offer, you need to be comprehensively integrated to the user journey and executing in real-time at scale and that's just where Braze has been the whole time. And so, we're really excited to see. The market is moving toward us. The external community is really picking up on this. We're seeing adoption and repeat adoption of the newest generative AI features and we're just really excited to continue to see that momentum build.

Yes, I agree, I think this definitely benefits to those that have shown product velocity over time. And for Isabelle, solid RPO performance in the quarter. Were there any deals or push out of 4Q into 1Q? And for new bookings, have you seen any signs of stabilization or improvement since the end of the quarter?

Yes, thanks for the question. So look, I think the overall evolution of the macro has not really changed. And what we're seeing in terms of elevated deal scrutiny and those elongated deal cycles, it is persisting. And so, we started talking about this last quarter, We are -- we continue to see that evolve and so there are deals from Q3 that pushed into Q4, deals from Q4 that pushed into Q1, and there were deals from Q1 that are pushing into Q2. So I think we're seeing some of that persist. But I do want to be clear that, that is embedded in our guidance philosophy and so that scenario is taken into consideration. And then, sorry, your second question?

Just to say, in the quarter, have you seen any stabilization or improvement on new bookings?

Yes. So we're continuing to approach this. It was sort of a risk-adjusted view, but we are seeing some of the benefits of the investments that we've made to continue to improve and enhance overall productivity of our sales force. And so we are definitely seeing stabilization in those numbers. I wouldn't say that we're quite back where we want to be, but we are certainly having more productive conversations and certainly happy about the progress that we've made in the trajectory that we're on.

Appreciate. Thank you.

And our next question comes from Gabriela Borges, Goldman Sachs.

Good afternoon, and thank you, Bill, I wanted to ask on the longer-term implications of generative AI and what customers are telling you the way it's going to impact their budget. In other words, what are you hearing in terms of customer spending intentions on marketing, technology, and software, this marketing people versus other areas of the budget and is it actually leading to customers potentially thinking about taking up their budgets for marketing software over the medium term?

Yes. So I think about the marketers that are actually canceling keyboard in Braze as complementary investment that a brand needs to make into achieving customer engagement goals. And in some cases, when you look at the total cost of ownership of obviously software like Braze, one of the things that we've always tried to do is to make the individual marketer or the smaller team, more and more productive over time. And the more that we can do that, the more people can move from whether it's a basic email marketing strategy that they're maybe running before or batch and blast approach to things, maybe they're not putting in rigorous data analysis or maybe they're running on a six week or a three month cycle where they refresh content rather than getting down to the more agile teams that we see today. We know that as teams adopt a more agile methodology with more experimentation, they're trying out more content, more strategies, they are bringing more moments in the user journey into this agile and experimental framework instead of just having it be some sort of transactional message or something that is hard-coded which is so often the case with a lot of product delivery, you would -- as a brand you would definitely benefit from turning those into growth experiments. But you leave them where they are, because it just takes a lot of human power to be able to turn those into these experiments. And so we're really excited to see the impact of making the individual marketer more productive. I think that it will -- in my mind, I think right now the number of customer engagement practitioners and the economy is still very low compared to the potential that more and more brands have. I think that we're going to continue to see software like Braze make them even more productive, which improves the ROI function for bringing those teams together and for up-leveling them. And I think that there are also some just really exciting things happening from a skill set perspective, I spoke about some of the second order effects of there being more pressure toward getting higher speed data, to be able to have a more comprehensive view of it. I think also when we look at the second order effects of wide scale adoption of tools like ChatGPT, they're going to catalyze other changes in the labor force, and you're going to see more people becoming comfortable with basic scripting and other low code approaches automation. And you see that in some of the features that we have that we're working on right now where SQL or HTML templates or looking at data transformer, logic or the liquid logic that enables personalization, these are all slightly technical concepts that definitely are not accessible by all marketers. And what ChatGPT and other sorts of co-generating co-pilots are going to do is, it's going to -- first it's going to help generate them. But second, it's going to really teach people that they can be more comfortable working with these more advanced ideas. It also, I think, increases ROI in other systems to be able to use first party data and real-time data. Both of which should encourage ancillary investments that kind of pave the way for Braze to enter the environment, while also creating more catalysts to move off of legacy deployments, whether it's legacy data warehouses, maybe people moving from on-prem into the cloud to take advantage of more elastic compute capability or moving off of legacy Marketing Clouds and Point Solutions. So I think this all comes together and really at the end of the day by improving the ROI of the investment by enhancing productivity, we see -- we should see both the software spend and just the size and the skill set of the community around customer engagement continue to grow.

Yes, that makes sense and it ties nicely into a little bit of the longer-term roadmap question. You mentioned the dynamic around consolidation of point products. You talked a little bit about competition. How are you thinking about Braze expanding longer term outside of marketing into perhaps adjacencies and other front office applications?

Yes. So when I look at this and look at the places where Braze's underlying foundation is supportive of us, continuing to take on more enterprise workloads and expand into new personas over time, it kind of models the -- or it parallels the same structure as I spoke about in the enduring differentiation that's going to drive forward our AI advantage. When you kind of break down Braze into these three parts, one of them is our comprehensive vertically integrated real-time data flow. The next one is the event-driven stream processor that gives a real-time kind of runtime and execution engine. And then you have experimentation and programmability through Canvas. And you saw just recently, we had a big productivity release, which was really focused on bringing more and more people into the Canvas environment, enabling it to be used for more use cases. And I think that when you extrapolate that forward, you see this future vision for Braze that really provides this real-time compute engine that lives in the flow of data being generated by customers through first party data as well as just other sorts of enterprise workflows. And provides the business user, the ability to not just kind of define these workloads in Braze but actually optimize and experiment with them over time. And so I'm not going to extrapolate exactly which markets we're planning on going into in the future through that, but when I look at the foundations that we have from a technical perspective and the early success that we've had, bringing these into the products here, bringing them into the data science and data engineering world, in addition to continuing to expand and break down the silos that exist within marketing teams, I think we have a proven ability already to bring disparate set of personas into the Braze environment really kind of create a home for them and produce value and encouraged collaboration amongst them as they bring more and more workloads into ultimately Canvas. And so as we continue to capture more of those, I think we see more scale. There is more of a center of gravity coming in because the data flow is all in that one place. People get comfortable turning more moments of their brand promise, their product journey, their -- whether it -- maybe it's their data governance or the way the data move through their organization and gets analyzed, the ways that they optimize, the data insights with AI and ML investments over time, those are all new personas that are coming in and ultimately moving those workloads to be executed by our stream processor and defined by the Canvas engine and that just creates tremendous potential and optionality for us in the future.

Sounds good. Thanks for the detail.

Absolutely.

And our next question comes from Taylor McGinnis, UBS.

Yes, hi, thanks so much for taking my question. I wanted to touch on the 2Q revenue guidance strength. So if we normalize 1Q and 2Q quarter-over-quarter growth for the two less days in the first quarter as well as North Star, it looks like at the high end of the 2Q organic guide, a sequential growth that is only a point below what we saw in 1Q. So the guide seems to apply some potential reversal of the decelerating sequential growth that we've seen. So can you just touch on what you saw in the quarter as well as what you're seeing in the demand environment today that's driving or giving you comfort in the outlook?

Yes, thanks for the question. So the 2Q guide excluding North Star, so excluding that $1 million, it does imply a little bit of a sequential reversion. But that is very seasonal. So remember, Q1, it's not two fewer days, it's actually three fewer days. And so that will then reverse in Q2 when we get the full 92 days in the quarter versus 89, so a part of that is seasonal. But we -- there is definitely some -- we're not necessarily seeing business -- material business re-acceleration, we are, of course, continuing to apply the same philosophical risk adjustment going forward. But you're seeing the seasonal difference between Q2 and Q1 there.

Awesome. Thanks so much for answering my question.

Next question will be from Michael Berg, Wells Fargo.

Hi, congrats on the quarter, and thanks for taking my question. I want to piggyback off of Gabriela's question on consolidation and competition. Maybe you can help us understand better, what's driving that currently in the near term. I think you guys announced you're going to have your resolution -- features are coming out soon and I think about that plus your data cloud ingestion capabilities, it seems like that may replace CDP, just as an example. So maybe you could help walk us through that dynamic. Thank you.

Yes, I mean, I think all these things work together. So first, you continue to see expansion of our channel options which I've also referred to as kind of the outputs from the decision-making. And so as we've added WhatsApp in recent quarters, we continued to expand our audience network integrations, as we continued to increase the flexibility of -- in messages to include more robust surveys and other sorts of capture forms, and just kind of continue to march ahead the integration points and the number of touch points that our customers can manage through Braze. You'll see the point solutions continue to consolidate in. Then, when you look from a data perspective, I think that -- what we're trying to really accomplish is to make sure that people can get data into Braze quickly and that over time the operational burden of keeping that data flowing into the platform was lessened. And so, we definitely are going to continue to stay partnered with CDPm with Reverse ETL vendors and with the data warehouses, because those are all augmentation on top of the direct integrations into the products that our customers have. But our entire data picture is more than just making sure the inputs are coming in. We're also doing more from a data transformation and a data governance perspective and we're making it so that more of the operational data ingestion pipelines, if you will, is actually -- we're taking responsibility for that include -- inside of Braze so that when a marketer deploys Braze, they can go to their development team or their data engineering team at the integration point and they can have them help them set up the pipelines, but they don't -- those data teams then don't have the ongoing operational burden of babysitting them forever. We think that that actually improves the working relationship between marketers and between those data and engineering teams over time. It creates more organizational desire to actually move more and more use cases into Braze because it's a place that's delivering, not just the ROI through the capability, but it's doing so in a way that streamlined and operationally efficient. And then, of course, as you continue to move more use cases into place like Canvas and I mentioned this in response to Gabriela's more forward-looking question around what do we see in terms of the future workloads and the future personas that Braze can be executing on, we already see in our customer base, a lot of people leveraging the flexibility of Canvas to be kind of general purpose computation and to be able to do things like data transformations inside of Canvas, to be able to deliver products and aspects of the product experience through our flexible webhooks and the other logic that exist within it. And so when you kind of think about the extensibility there, you continue to pull in more use cases over time. And so just across the board, we're really thinking about how do we smooth the on-ramp of getting data into Braze, how do we make sure that over time organizations have across the entire set of people, collaborating, have got great perspective on Braze. It's not just a marketing tool that kind of libs inside of their ecosystem, it's really something that everyone can get value out of and that kind of gives them a home within it. And then you make it easy for them to bring new use cases in. You let them experiment and drive more value out of moving more and more workloads in the Canvas and give the massive flexibility to be able to deliver outputs, whether those are messages or product delivery or what have you through the flexibility of all of our different channels. And those combined together to just continue to push vendor consolidation.

Helpful. Thank you very much.

Next question comes from Derrick Wood with TD Cowen.

Great. Thanks for taking my question. Bill, last quarter you guys talked about kind of relative strength in the enterprise, but seeing more acute headwinds down market. This quarter you had a stronger net new customer generation. Can you just talk about anything you'd flag and what drove that sequential strength and maybe just comment on what you saw across enterprise versus commercial cohorts?

Yes. So I think, as people are generally aware in SaaS, Q4 tends to be a pretty enterprise heavy quarter just because of the way the budget cycles work with a lot of these enterprises, and that definitely drives some Q4 specific behavior. As we got into Q1, I think that -- as Isabelle mentioned, we're continuing to broadly see a lot of the same pressures in the macro. And so a little bit more commercial business coming in, obviously, as you see in the net new customer adds. But I think, I would still characterize in broad strokes the differentiation between relative strength in those customer categories very similarly. I do think as well though, a lot of that -- I mean, this is again echoing what Isabelle said earlier, a lot of the work that we've done to improve execution, our work against competitor, tactics, and things like that, has all been really bearing fruit and we just continue to see Braze -- people across Braze all over the world, rising to the occasion of this difficult macro and making sure that we're executing during this time where it's such a great opportunity for us to be separating away from the competition. I know it's hard to always see that when the macro has such a tight lid on everybody's results, but we're really excited about the opportunity that this period represents, create separation in terms of market momentum, in terms of mindshare, really continuing to blow out the R&D velocity in such a meaningful way and we're really excited to see things start to improve. I'm not going to speculate on exactly when that's going to happen. We're still seeing a pretty similar environment as we have for the last couple of quarters, but we're excited about it. We're controlling everything we can and I think we're doing a great job of it.

Got it. Isabelle, one for you. Very strong free cash flow in the quarter. I know as you commented, there tends to be volatility quarter-to-quarter, but any goalposts we should think about keeping in mind for free cash flow for the year versus how you're guiding operating income?

Yes. So I mean, I'm going to come back to the point that I've made over the last couple of quarters that free cash flow is going to continue to be volatile quarter in and quarter out. So we advise folks still hit it on more of a four quarter trailing. I'll reiterate the longer-term guide by the end of next year being both operating income positive by the fourth quarter of next year, in the quarter as well as free cash flow positive in that fourth quarter of next year. So look at that, look for that trajectory. I don't think it'll be linear. And so I would definitely expect some ebbs and flows there, which is part of the reason why we don't provide specific guidance on that metric.

Got it. Well done. Thank you.

Next question is from Brent Bracelin with Piper Sandler.

Good Afternoon. I wanted to go back to kind of the macro-demand environment. Totally understand the environment is still challenging. Sales cycles remain challenging. But you did flag retail and media entertainment as one area of strength you saw in the quarter, I was hoping you could double click into the drivers of that improvement. Is there something specific to those verticals that's resonating around first party data, is it omnichannel? Just walk us through maybe a challenge macro in those environments, but Braze's ability to do a bit better. Thanks.

Yes. I think it's both of those things. I think also Braze has shown tremendous ability over the years to get great reference and landmark accounts in categories and be able to leverage the increased -- know-how that we have around the business, and those customer examples to be able to continue to expand within those categories. We've also with -- retail and e-com in particular, we've also done a lot on the product side in order to do things like improve our Shopify integration and continue to build out e-com specific features. You saw the product catalog launch launched last year. We continue to enhance the capabilities of the product catalog over time and we're really excited about the future of that entire kind of data storage sitting along -- the capabilities of having that data storage sitting right alongside Canvas. And so I think that you'll continue to see over time Braze from a vertical perspective that, in any given year. we've seen our ability to build on prior momentum within different categories. There's other places where we spread our bets out and make sure that we're always cracking into new categories for the future, so that we can continue to have robust diversified growth even as things like the macro or other sorts of competition effects might hit a particular vertical or another. We've always been very diversified. And I think it's given a good durability and predictability to our results. And we're continuing to see that as well. However, or not however, I would say, and from a first-party data perspective, I think that we're seeing some really exciting investment and continued momentum in terms of how brands are thinking about first-party data. So most of the conversation about first-party data in the world recently has been largely, I would say, defensive or like focused on avoidance of loss, which is that, everyone is kind of talking about needing to invest in first-party data as their third-party datasets either become invalid, incomplete, illegal to use, et cetera, and they are frantically trying to build up our first-party data sets, so they can keep running the same performance marketing strategies as before. The next stage of that which is the stage that most Braze customers are at, is really realizing that first-party data has a job to do in describing your first-party relationships and understanding them. And once you can describe and understand them, when you pair that with customer engagement, you can then take action on them. And so at that point your customer relationships go from something that kind of exists and the either choose something you can really put your hands on as a brand and optimize and influence and move in a positive direction. We're really excited to see then the next stage of that is when customers start to look at their first-party relationships as an important brand asset and one that gives them the ability to have more flexibility within their business model, because on top of that customer relationship, you can start to expand the breadth of products and services that you're delivering to them. You can extend the lifetime of the relationship with the customer and you. Of course, that's all helped by customer engagement. And so, I think broadly you're seeing this transition as people start to wake up the first-party data, they start to collect it in the early days. Then they realize, once they have it. it's something that they can start to take action on and then those relationships start to feed into more innovative business strategy. And we see that whole spectrum across both our prospect and customer base, but it's an evolution that's all moving in one direction and it all points toward more future success for us.

Sounds good. It's great to see the soft execution. Thank you.

Thank you.

And our next question comes from Brian Peterson with Raymond James.

Hi, thanks for taking the question. Just one from me. So I wanted to double-click on the vendor consolidation point. I know it's come up with other questions. But, Bill, you mentioned that as a benefit this quarter, would you characterize that as something that's really reflecting this year or is that more of a continuation of the norm? How do we think about the balance of cross-sell versus upsell in that -- our metric this year. Thanks, guys.

Yes. So I think we are seeing a bit of an inflection, obviously, as I mentioned before with the macro where it is -- it's hard to really compare to historical data because there are some other conflating factors that are out there. But if you think through what's going on with enterprise software buying right now, there's a lot more scrutiny on the budgets and the stack and there has been a lot of categories where you've seen people moving from either a point solution or maybe someone bought a suite before, but they were really only using it for a single thing and starting to really rationalize all of that spend. And I think that when you look across all of the different marketing communication software that's out there more broadly, that Braze really stands head and shoulders above the rest of the competitive set in terms of being really comprehensive from a cross-channel perspective and really being able to execute on all these use cases. I've spoken in the past about the importance of Braze's vertical stack design where, because we put such a strong abstraction layer over the channels, the feature set that you have within Braze for any given channel has a lot of consistency across it. And that means that when we add a new channel like we just launched WhatsApp recently, our marketers are immediately able to utilize all of the advanced capabilities that exist for targeting, for personalization, for orchestration, with that brand new channel right out of the box. And so Braze is very quickly competitive with even single channel-focused software as we add new channels. Similarly, not just from a feature set perspective but actually from a familiarity perspective, because we've been designed to have all of these integrated together, which as I mentioned before, is very different from how the legacy marketing clouds were assembled which was mostly through inorganic expansion where all the channels kind of work a little bit differently, the feature sets are heterogeneous across them, within Braze you have this consistent user experience. And so, marketers are able to confidently say like, oh, yes, I know how to send push notifications in Braze. I can also send SMS. I can also send WhatsApp. I know how to deliver in-app messages within Braze. I can expand that on my website. I can add it to my inbox. I can start to run surveys. There's just a lot that we've done to smooth the on-ramp and that expansion ramp both for new customers to come in and feel confident that they can pull together four or five prior vendors and run all those use cases through Braze, as well as maybe someone that only started with one or two channels in Braze, then systematically going through the rest of their ecosystem and really having that Braze be the center of gravity around all of their customer engagement use cases. And so that's something that we continue to see happening over time and that has been the consistent pressure. I think the macro has probably caused people to really go and scrutinize some of the decisions they made in the past to kind of blow out a number of different point solutions, when they maybe didn't have as much scrutiny on the purchasing. And then similarly, another important thing that's happening is just more collaboration across these teams. And so I mentioned that earlier about thinking about marketing and product and data teams and so, there are certain product use cases that you may have bought either a different vendor for, like our launch of Feature Flags that we had last fall, or maybe you look at something like simple surveying where someone would have bought a different product. Also within the marketing organization, the same pressure exists. So there's -- there previously hadn't been a ton of collaboration between the performance marketing teams and the customer engagement teams. As you start to see first-party datasets becoming more important for performance marketing strategies, you've got more collaboration happening between those teams. And that means that you've got things like our Audience Syncing, which started out with Facebook and Google, Audience Manager integrations, a couple of years ago when we launched that, we've since expanded into a whole bunch of other ad networks, looking at places like TikTok and Pinterest and LinkedIn, and what have you. And that actually is now creating a reason for more teams to collaborate with each other within the Braze environment and that continues to support the vendor consolidation drive because more use cases are coming into Braze. And so, I think that it's at a -- we're noticing more of it. A big part of that is because of the rapid development velocity of the product. Another part is the macro and then you've got that longer-term process happening with just greater collaboration amongst these different groups.

Thanks, Bill.

Yes.

Our next question will come from D.J. Hynes with Canaccord.

Hi, guys. Bill, maybe you could talk a little bit about what you're seeing in terms of adoption of cloud data ingestion. And then, for the customers that turn that capability on, what are you seeing in terms of signs that maybe A, they're spending more with Braze, or B, yielding better results? Any color there would be helpful.

Yes, absolutely. So when look at cloud data ingestion and the impact on kind of revenue and adoption, it breaks down in a few ways. One of them is just more time to value, faster time to value, being able to get people up and running more quickly, and being able to therefore get more datasets. And so one of the impacts that you often see, whether we add a new channel and a new set of use cases or we add a new data source, there's a lot of times those data sources are describing users that previously had not appeared in wherever we were integrated before. So you had your mobile audience and maybe there was a customer loyalty program database that was living in the data warehouse, you wanted to be able to get those users into Braze to start orchestrating either emails to people or SMS or whatever it is, but you were stuck on in an engineering roadmap and it's going to take six to four months to get the integration or what have you. By us drastically reducing the amount of effort required to get those new datasets into Braze, we take on more use cases that brings in more monthly active users, it adds more message volumes. And as we've spoken about a lot in the past, we're really trying to make sure that when we value sell, we do so in a way where we're enhancing the value of the monthly active user, that we're collecting the value of a contract primarily in the middle of the SAC. We're really trying to make sure that when data is flowing into Braze that we're always working to kind of lower the cost of getting data into Braze, both in the near term and the long term. And so we're seeing great adoption of that by new customers and existing customers as they want to bring in datasets that were previously kind of stuck in those data warehouses. And we're already seeing, in terms of just like quantitative numbers, we're already in the billions of rows ingested across cloud data ingestion since it launched last fall. We also are looking at things like expanding the cloud data ingestion concepts into product catalogs, which I mentioned before, has been a driver of the e-com business. And that gives you an ability to bring in not just data about users but also data that's coming in from obviously a product catalog, maybe it's about your franchises, maybe it's other sorts of data around translations. There's a whole bunch of other datasets that can come in that aren't keyed on the user. that we're making it easier and easier to get into Braze so that it can sit alongside the stream processor.

Makes sense. Thank you very much.

Our next question comes from Arjun Bhatia with William Blair.

Perfect. Thank you. Bill, I wanted to touch on the legacy marketing cloud refresh cycle that we've been talking about. Can you just help us understand why this is happening now? It's certainly a positive for someone with a more modern stack. Why is this taking place now and what have you noticed about the customers that have come from legacy marketing clouds to Braze in terms of their sophistication, their usage, their scale, et cetera?

Yes. So first, I point out that the -- we think the legacy replacement cycle is broader than just people moving from the legacy marketing clouds into more advanced platform like Braze. There's also a lot of legacy point solutions that are out there in the email marketing space and there is a kind of a broad away or array of tools that have been deployed over the last 10 to 15 years that are not just the usual suspects of Salesforce Marketing Cloud or the Adobe Experience Cloud or the Oracle Marketing Cloud. And we spoke about this last quarter, I think we continue to see it, which is that, when you look across the rest of that legacy landscape, I think that those aforementioned legacy marketing clouds were actually hovering up a good portion of the legacy replacement cycle across those other tools before. I mean Braze didn't have as much mind share or market share awareness amongst those buyers. I think that's pretty fundamentally changed over the last probably call out the last 12 to 18 months. Certainly, the notoriety of having gone public helped with that a lot of -- that we've done in our ecosystem strategy with our partners, looking at the GSIs and our partnership with WPP and just continuing to expand and get our -- get the Braze brand and Braze product awareness into more corners. And I think we've also seen some of the shine come off of those legacy marketing clouds too as buyers have started to understood -- or understand more deeply that they are antiquated data processing architectures and destroying capabilities they have across their multiple channels, but not coordinated seamlessly across channels. That -- those are differences that really matter. And so that is really helping. And then, obviously, we also continue to have the inflow from the legacy marketing clouds as marketers and product teams are trying to be able to act on data and more real-time be able to bring together more of these channels and more of the use cases. I think that one thing that always helps there is when we continue to add net new channels very quickly, if you want to be able to send WhatsApp, if you want to be able to do the Audience Network integrations, you want to be able to coordinate those things in real-time and have them be triggered by not just actions within their silo but be able to cross coordinate the data inputs across disparate platforms and product interfaces and actually then deliver in these other channels, many of which are new or expanding quickly, these are all the catalysts that really get you to move on from your old strategies. There's also a lot that's just happening in the broader landscape that is starting -- continuing to put pressure on it. So if you look at things like Apple mail privacy that launched or the app tracking transparency, changes that continue to gain CE more -- the continued deprecation of cookies like, these are all things that have made operating siloed software much harder. You're like flying more and more blind over time unless you're meaningfully integrated into the product journey. And similarly this -- lot of the changes that are happening around things like email deliverability, you look at a lot of the kind of spam filtering that's getting more aggressive even in channels like SMS or in notification centers, or push notifications, all of these create increased returns to sophistication for marketers. And they make it so that if you're still just running the same basic strategies, they are less and less often even getting in front of your end consumer's eyeballs. And so just staying in place and continuing to use this old software is not just holding steady, it's actually actively deteriorating. And I think when people wake up to that, they don't find an ability to actually evolve the sophistication of their strategies in that old software and they need to upgrade to some more like Braze.

That's very helpful. Thank you, Bill.

And our next question comes from Brian Schwartz with Oppenheimer. Brian, you may unmute and ask your question. We'll come back. Next question will be from Pat Walravens with JMP Securities.

Great. Thank you and let me add my congratulations. So Bill, when you look at sort of your partnership opportunities, what are you most excited about? And what's out there that you guys don't have yet that you'd like to get?

Yes. I mean we've been really excited about the momentum that we've seen across the GSIs and across the big marketing agencies and specifically, we talked a lot about WPP last quarter. We're continuing to deepen our coordination with those partners and also seeing them continue to build their bench of certified people within their teams that are ready to integrate Braze, ready to help our customers run campaigns and evolve them over time. And so that's been really good to see that flywheel that I've spoken about over the last couple of quarters is really starting to spin. Within the technology partner landscape, we've been continuing to partner really closely all up and down the stack, looking at data warehouse providers, looking at a lot of the data transformation players, continuing to have channel partnerships as well to expand out there. I spoke about the Audience Network generation -- the Audience Network expansions as we've gone into more and more ad network targeting, as well as obviously the partnership with Meta as we've expanded into WhatsApp. So there's a lot that we've been doing across the partnership landscape and we're continuing to invest in those. I'd also go back to some of the ecosystem wide effects that we think we're going to see as a lot of the -- a lot of decision-making at the corporate level is going to try to optimize for getting more value out of AI. I think that these are also pressures that are going to motivate more brands to move to real-time, embrace data streaming, continue to ramp up their investments in first-party data, all of which are catalysts which are going to help drive that legacy replacement cycle. And I think that means that our partners in the modern data ecosystem are going to stand the benefit. And so whether those pressures caused them to really look at customer engagement first or it causes them to look at the rest of their data ecosystem and start to upgrade all of it to be more real-time, to be based on streaming, to be cloud-based, like whatever it is, that is really their evolution. Those are all things that help our partners and it further smooths the path to them becoming a Braze customer over time.

Awesome. Thank you.

Our next question will be from Brian Schwartz with Oppenheimer. Brian, please press to unmute.

Good afternoon. this is Camden Levy, sitting in for Brian Schwartz today. Thank you for taking my question. Can you speak about the momentum you've seen with global GSIs and sourcing new business? And if possible any insight you can provide on the percentage of your net new ARR that is currently derived from these growing relationships. Thanks.

Yes. So we're not disclosing that quantitatively, but I will say that qualitatively, as I just mentioned, we continue to see that flywheel spin up. We've got really great account coordination. We've got all the right -- communication channels are in place. We've got mutual investment on both sides and we're excited to see how those partnerships continue to bear fruit over time. When you look at the broad evolution of where -- I think the GSIs are trying to move to have more creative services, to be able to work on more of these customer engagement and marketing use cases. When you look at the marketing agencies and the big holding companies, they're trying to evolve to have more data sophistication and be able to help with more of these ongoing integrations and really kind of -- really express our technical chops and Braze exists right at the intersection of where both sides of that landscape want to evolve to. And so we've been really excited to be their partner, help -- bring them into this new world of modern customer engagement, to be able to do more with first-party data, to be able to do it faster, to be able to bring more value through experimentation and agility. I think that one of the topics that we spoke a lot about at the beginning of this call was just what more you can do when you've got more productivity, you have more access to hands on keyboards, to have resources to be able to run these strategies and evolve them over time and that's one of the things that's most exciting about our partnerships in that landscape is that it just brings more able hands and minds to the strategies that our customers want to be able to run and help them evolve and improve them over time.

Perfect. I appreciate the color. Thanks.

And our next question comes from Nick Altmann with Scotiabank.

Awesome. Thanks, guys. Just given the strength in billings and customer count and the sequential step up you're guiding too in revenue for 2Q, I know, Isabelle, you talked about deals that slipped out of 4Q closed in Q1, but I'm curious just, was there any sort of pull-forward activity of bookings in the 1Q? Thanks.

Yes. So there is some push out of Q4. If you think about -- if you remember, in Q4, we talked about a pretty back-end loaded bookings quarter. And so the way we count customer count is by when we actually start recording revenue which means the customer start date has to have actually passed. And so if you book a brand new deal on the very last day of the quarter -- in the last, or in the last week of the quarter, it's going to take a little bit of time for that to become a new customer. So some of that is timing and some of that -- and then we've seen some of that happened in Q1 pushing out into Q2. I mentioned that in answering a previous question. With regards to the guide, I'll come back to a little bit of the seasonality. We're not forecasting any improvement in the overall environment. In fact, we're -- our guide philosophy is generally unchanged but we are -- including the fact that sequentially, there are three extra days in Q2 versus Q1. Q1 is just seasonally our lowest sequential revenue quarter. And then you will see that start to reverse going into Q2.

Our last question comes from Yun Kim of Loop.

Okay, great. First, Isabelle, can you just talk about the how international regions performed in the quarter, especially on the heels of the WhatsApp integration release?

Yes. So WhatsApp, look, just released in March of this year. And so we're seeing a lot of interest by customers and a lot of good momentum in pipeline. But we're not meaningfully yet adding to revenue from that channel. We saw the same thing with SMS when we launched this about a little over three years ago. So there's a lot of kind of keen interest and we look forward to kind of that adding overall. We don't disclose the net contribution from various channels, because we'd like to think of the channels as sort of all working together and that's really just what I would say about the WhatsApp contribution.

Okay, great. And Bill, real quick. Do you expect that generative AI to work better and more -- and be more impactful on certain messaging channels that are more real-time driven, for instance.

I wouldn't call it out across channels. But one of the things I'm most excited about with respect to generative AI, especially as we're talking about some of these smaller teams or one person teams is, because of the ubiquitous global adoption of smartphones and I think that just the app stores in general, more brands than ever before serve global audiences. But many of their customer engagement teams are still isolated to just one country or a handful of countries. And one of the best features of LOM as a co-pilot is their inclusion of a wide array of cultures, human personas, different languages. And so I spoke about generative AI being amuse earlier. And I think it's a lot more than just getting over writer's block. It's also about enabling a marketer, who is kind of lived just one life in one place to connect better with a globally diverse audience. And when you combine that with Braze's personalized varying capability and some of the other automated decision-making capability that we have in Canvas, what it does is, it provides just substantially more inputs for us to go and optimize. And so that's going to move across channels. And I think that the key part is that more of the user journey that gets into Canvas, the more the workloads that are defined there, gives us the mapping of all the different moments that we have to be able to intervene. And when we can improve the kind of diversity of different techniques and engagement strategies that an individual marketer is using or generating within Braze, we can then unleash our AI on it and really go and optimize the results for them in a way that they just never would have been able to access before.

Great. Thank you so much and congrats on a solid quarter.

Yes. Thank you.

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