Welcome to the Braze Fiscal Third Quarter Fiscal 2023 Earnings Conference Call. My name is Laila and I will be your operator for today’s call. At this time, all participants are in listen-only mode. After the speakers’ presentation, we will conduct a question-and-answer session.

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

Thank you, operator. Good afternoon and thank you for joining us today to review Braze’s results for the fiscal third quarter 2023. I’m joined by our Co-Founder and Chief Executive Officer, Bill Magnuson; and our Chief Financial Officer, Isabelle Winkles. We announced our results in a press release issued after the market closed today.

Please refer to our Investor 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 safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These statements include, but are not limited to, statements regarding our financial outlook for the fourth quarter and full fiscal year ended January 31, 2023 and for our fiscal year ended January 31; 2024, the impact of our planned sales initiatives; our planned product and feature development; our competitive landscape and the behavior of our competitors; our anticipated market opportunity; the impact of current macroeconomic trends; our anticipated customer behaviors; our growth plan; our vision; and our long-term financial targets.

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 Investors section of our website.

I’d also like to remind you that today’s call will include certain non-GAAP financial measures used by management to evaluate our ongoing operations and to aid investors in further understanding the Company’s fiscal third quarter 2023 performance in addition to the impact these items have on the financial results.

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

The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with US GAAP. And now, I’d like to turn the call over to Bill..

Thank you, Chris, and good afternoon, everyone. We delivered a strong third quarter, generating $93.1 million in revenue, up 46% versus the prior year and 8% compared to the prior quarter.

For the first nine months of the year, we've grown revenue 53% compared to the same period last year, demonstrating the high ROI and long-term value of the Braze solution. We also realized solid customer growth, increasing our total customer count by 116 sequentially and by 38% in the last 12 months.

While our number of large customers, which is defined as those generating at least $500,000 in ARR increased 53% year-over-year. Notable recent new business wins and upsells include FanDuel, Panera, and Vizio, among others.

For Panera bread, a North American fast casual bakery cafe concept with over 2,100 locations, will be powering email and mobile campaigns for their award-winning app and industry-leading MyPanera loyalty program that has over 50 million members.

Additionally, Panera will be leveraging content cards to build a personalized messaging inbox spanning web, mobile and in-restaurant kiosks.

We also signed a multi-year cross channel deal with a large global brand in travel and hospitality, again demonstrating our ability to land with some of the largest enterprises in the world and power best-in-class Omni channel engagement across verticals and geographies.

Travel and hospitality is a category where we continue to make great strides and we look forward to updating you on our progress in this important vertical in the coming quarter.

I also want to highlight an American multinational fast food chain with tens of thousands of global locations that has renewed and meaningfully grown its seven-figure investment embrace. We're excited to expand our footprint with this customer across new use cases, channels, and geographies.

This reason upsell means Braze will soon be powering marketing, promotional and loyalty campaigns across email and mobile in all of their lead global markets.

Continuing our tour of some of Braze's important verticals, Cyber Week is a critical time of year for many retail and e-commerce brands and this was reflected in our messaging volumes over the period this year. From Black Friday to Cyber Monday, we executed over 31 billion total messages across our many channels, up 43% from the same period.

last year. More importantly, we again achieved 100% global uptime through this year's cyber week, notwithstanding record high volumes. In our view, this robust messaging growth is a proof point that customer engagement remains an imperative for today's businesses.

In fact, we continue to see signs that first-party engagement is rising in importance for brands as both rapid time to value and robust return on investment are prioritized during this period of economic uncertainty.

That said, we did continue to see some of the macroeconomic headwinds reported by many of our software peers, including elongated deal cycles and increased scrutiny on software investments, particularly with new business.

In contrast, upsells were particularly strong, achieving a new high watermark in the quarter, led by success with our global strategic accounts. And despite the challenging environment, our pipeline is robust and demand for customer engagement solutions remained strong.

As we continue to experience these success stories, both with new and existing customers, we remain relentlessly focused on the continuous improvement of our products and services.

At our recent Forge customer conference, we outlined our Start Anywhere, Go Everywhere framework, in which we recognized that Braze customers exist across the full spectrum from small pre-launch startups up to the world's largest multinational enterprises and that we are committed to meeting our next generation of customers wherever they are in the transformation of their customer engagement practice, getting them up and running quickly and helping them rapidly realize high ROI.

The brands and teams that use Braze range from ambitious small businesses that may only have a single dashboard user through a diverse array of rapidly scaling companies with agile, interdisciplinary teams, all the way up to complex multinational enterprises with marketing and engagement teams that span across hundreds of people and they're all leveraging the same Braze software.

Some customers even start by simply migrating their existing email or push notification strategies into Braze, but once those early campaigns are live, rapid results build the case for further expansion and Braze is built to help teams quickly leap forward in sophistication while expanding across new channels and use cases, all while enhancing the customer experience of their products and building first-party relationship assets.

Meeting the distinct needs of this diverse set of customers requires ongoing innovation and nimble, efficient execution.

With the Braze philosophy of Start Anywhere, Go Everywhere, we are committed to ensuring their accessible starting points into Braze paired with a smooth on ramp to get up and running quickly while also investing to promote the continued growth and maturation of our customers' usage of Braze over the long-term.

The Start Anywhere, Go Everywhere mentality also informs the evolution of our addressable market in tandem with that of the profession of marketing and customer engagement.

Many of the job titles and teams that rely on Braze today were not around when we were founded in 2011 and their continued rise in prominence is an important indicator that Braze's moat extends into our customer community and is reinforced by the mutual evolution of our product, along with the maturing skill sets in our space, that continue pushing customer engagement strategies to new heights.

As businesses evolve to better serve their customers who then reward them with stronger first-party data and more valuable relationships, we will continue to see brands progress the maturity and sophistication of their customer engagement practices.

We further believe this strategy could expand our total addressable market in the long-term through adoption among data engineers, product teams and creative groups and we are investing in R&D accordingly..

To illustrate the impact of our R&D, I'd like to briefly highlight recent product innovations and integrations that we announced at our Forge events in New York and London in October and November, respectively. We introduced a number of updates to help customers more quickly bring new data sources into Braze and efficiently use them over time.

A great example is cloud data ingestion, which allows customers to directly connect their data warehouse into Braze, quickly importing and activating customer data with just a few clicks.

Customers are already unlocking new use cases and solving difficult problems like identity resolution by sinking audiences into Braze that are created from queries in their data warehouse.

For example, a quick service restaurant might want to message all users who ordered special menu items in a promotion from a previous year, but haven't sent that data to Braze or a financial services company might want to message users with low account balances but need sensitive account balance details to stay on-prem.

Early access customers report significant weekly reductions of developer hours, which can now be redirected to product improvements.

By greatly reducing the operational requirements of managing data pipelines, these efficiencies can also improve relationships between the marketing teams that use Braze and the engineering teams they often rely on to help bring new ideas to life.

Early examples of customer case studies include a streaming service running a multitude of data syncs for everything from account updates originating in their back end to targeting based on sensitive information such as credit cards.

And a gaming company that is aggregating all of their purchase data from different channels, in-store, online and platform marketplaces and syncing it with Braze via cloud data injection for targeted messaging to recent purchasers and their biggest spenders.

Snowflake is our first partner for this turnkey integration, and we plan to expand to the other major data warehouse partners, Redshift and BigQuery, enhancing the data flexibility of Braze for our customers.

Just as we are working to improve the ease with which data and engineering team members interact with Braze on behalf of their marketing teams, we are also building features and interfaces for them to use directly.

One recent example is the introduction of feature flags, which enable customers to easily launch and test new features with limited audiences or within targeted geographies before committing to a broader rollout.

We also launched a programmatic API for our existing data feature catalogs, which enables our customers to co-locate new data sets within the Braze infrastructure, making it easily available for real-time personalization use cases within Canvas.

And by leveraging a broader data architecture built on Snowflake, MongoDB, Kafka and others, Braze provides businesses with the most flexible customer engagement platform for data activation.

We believe these product innovations help build on the value generated by the ever closer collaboration between product developers and marketing experts in service of a better customer experience. A central tenet of our product vision at Braze is that we help our customers reach their users on the channels that they care about most.

This is why we built our product to be omnichannel, and as customer behavior evolves, we continue to expand the breadth of Braze's vertically integrated channel set.

As such, we also recently announced native channel support for WhatsApp, a platform used by over two billion users in 180 countries, which is currently in early access with a handful of customers.

Once early access is concluded in early 2023, marketers around the world will be able to create, orchestrate and send WhatsApp campaigns directly from the Braze dashboard to strengthen customer relationships with content-rich messaging.

Braze is directly integrated with the latest version of Meta's recently overhauled WhatsApp cloud APIs, and our solution is designed to be marketer friendly, allowing customers to build WhatsApp campaigns and a native composer and manage the channel similarly to how they use SMS.

In addition to the usability benefits afforded by our direct integration, our WhatsApp offering is further differentiated by its seamless integration into the Braze platform's orchestration capabilities.

With Canvas Flow, our visual development environment for customer engagement programs, customers can harness all of the power and sophistication of Braze to seamlessly incorporate WhatsApp messaging into their marketing mix and easily orchestrate 2-way WhatsApp conversations with end users.

For another example of channel expansion, we look to Braze Audience Sync, which helps customers drive efficiency and reduce costs in the ad buying ecosystem by allowing them to leverage the real-time first-party data flow managed by Braze to optimize their usage of expensive advertising channels through enhanced targeting, suppression and look-alike audience development.

Customers have historically seen strong success with Audience Sync integrations through Facebook and Google. So at our forge event in London last month, we were excited to announce early access for Audience Sync with TikTok.

This integration will enable brands set dynamically and securely sync first-party user data from Braze directly to TikTok for audience classification.

Brands can send custom audiences to TikTok for fine grand ad targeting alongside first-party messaging as well as optimize their ad spend through precise real-time suppression less and versatile look like audience creation.

Lifesum, a digital health company in EMEA is currently using the beta version of TikTok Sync to target TikTok ads to users and convert them into paying members while suppressing ads to active premium users.

It took them just one day to get up and running and the integration has proven very valuable in extending their paid social reach, while improving cost efficiencies. Before turning the call over to Isabelle, I'd like to take a few moments to highlight our inaugural environmental, social and governance report published last month.

As I've stressed on past earnings calls, Braze believes its responsibility as global citizens and technology leaders is to be a positive force for our employees, communities and shareholders.

This report was the product of our social impact department and includes our first greenhouse emissions audit, first materiality assessment and it outlines our inclusion first approach to diversity, equity and inclusion. The report can be found under the governance section of our investor website.

Thank you again for your continued interest in and support of Braze.

We remain committed to delivering industry-leading engagement solutions for our customers and efficient growth at scale for our shareholders and we look forward to continuing this journey to become the de facto standard for customer engagement with you over the coming months and years. And now I'll turn the call over to Isabelle..

Thank you, Bill, and thank you, everyone, for joining us today. As Bill mentioned, we reported a strong third quarter with revenue up 46% year-over-year to $93.1 million. This was driven by a combination of existing customer contract expansions, renewals and new business.

Our subscription revenue remains the primary component of our total top line, contributing 96% of our third quarter revenue. The remaining 4% represents a combination of onetime configuration and onboarding fees as well as other professional services, which are subject to similar annual contract terms as our subscription-based revenues.

Our customer count increased 38% year-over-year to 1,715 customers as of October 31, up 116 from the prior quarter and up 468 from the same period last year. Our total number of large customers, which we define as those spending at least $500,000 annually grew 53% year-over-year to 148 and as of October 31, contributed 56% to our total ARR.

This compares to 97 large customers contributing 51% to our ARR as of the same time last year. Compared to last quarter, this reflects an increase of 9 from 139 large customers that contributed 55% to total ARR as of July 31. Turning to dollar-based net retention.

As a reminder, our dollar-based net retention represents a 12-month trailing statistic and sources of upsell dollars include growth to existing contracts through increases in pre-committed volumes of monthly active users and messaging entitlements and the addition of add-on features and recurring professional services as well as signing new business units as we continue to further penetrate our existing customer base through both geographic and brand expansion.

Our renewal rate, combined with upsells from our successful land and expand motion drove strength in our dollar-based net retention statistics. Measured across all customers, dollar-based net retention was 126%. Dollar-based net retention for our large customers, those spending at least $500,000 annually was 129%.

Expansion was again broadly distributed across industries and geographic regions. Our global footprint continued to expand in Q3 and revenue outside the U.S. contributed 43% of our total revenue in the third quarter, up from 42% in the prior quarter and 40% in fiscal 2022. Moving to our remaining performance obligation.

In the third quarter, our total remaining performance obligation was $409 million, up 34% year-over-year and generally flat sequentially. Current RPO was $283 million, up 42% year-over-year and up 3% sequentially. The year-over-year increase was driven by contract renewals and upsells and the signing of new customer contracts.

While total RPO was generally flat compared to last quarter, we did experience a modest decline in the RPO value beyond one year. This is attributable to slower new business growth a higher percentage of shorter duration contracts than in the prior periods and fewer renewable dollars available in the quarter.

Overall, dollar-weighted contract length remains at approximately two years. Now I'd like to review the income statement in more detail. As a reminder, some of the metrics I will discuss are non-GAAP. We have provided a reconciliation of GAAP to non-GAAP financials in our earnings release and accompanying earnings presentation.

Non-GAAP gross profit in the quarter was $64.9 million, representing a non-GAAP gross margin of 69.7%. This compares to a non-GAAP gross profit of $45 million and non-GAAP gross margin of 70.3% in the third quarter of last year and 69.3% in the second quarter of this year.

Non-GAAP gross margin percent declined 60 basis points year-over-year due to several factors, including higher hosting and infrastructure costs, higher third-party messaging fees, increasing headcount costs as we continue to invest for growth and onetime hosting migration costs we incurred as we continue to optimize our tech stack.

Turning to operating expenses. Non-GAAP sales and marketing expense was $46.2 million or 50% of revenue compared to $28 million or 44% of revenue in the prior year quarter.

This reflects our investment in head count and increased travel and entertainment expenses as the easing of COVID-related travel restrictions allowed for more in-person events including our New York forge customer event, in-person employee training and customer meetings.

Non-GAAP R&D expense was $17.5 million, or 19% of revenue compared to $11.1 million or 17% of revenue in the prior year quarter. The dollar increase was primarily driven by headcount to support the expansion of our existing offering as well as to develop new products and features to drive growth.

Non-GAAP G&A expense was $18.6 million or 20% of revenue compared to $10.9 million or 17% of revenue in the prior year quarter. The dollar increase was driven by investments to support our overall company growth and public company expenses.

Non-GAAP operating loss was $17.3 million compared to a non-GAAP operating loss of $5 million in the prior year quarter. Non-GAAP net loss attributable to Braves shareholders in the quarter was $13.8 million or a loss of $0.15 per share based on 94.5 million weighted average basic shares outstanding during the period.

This compares to a loss of $3.3 million or a loss of $0.16 per share based on 20.7 million weighted average basic shares outstanding in the prior year quarter.

Although the global macroeconomic environment has been challenging over the last two quarters, this environment has also presented a unique opportunity to execute on our post-IPO investment plan.

In the 4 quarters since our IPO, we have successfully built out teams across functions and geographies in order to capitalize on the significant market opportunity ahead of us and the unique hiring environment over the last several months, particularly in R&D.

At this time, we feel the investments we have made to date position us well to continue to drive sustainable growth while delivering on our commitment at our Analyst Day in October to focus on our path towards profitability.

While headcount will continue to increase moderately as we close out FY '23 and look ahead into next year, we have recently chosen to slow our recruitment activity for net new hiring.

Therefore, while this investment momentum will continue into the beginning of next year, you should expect the rate of OpEx growth to moderate as we increase our focus on driving operating leverage across the business. Now turning to the balance sheet and cash flow statement.

We ended the quarter with $477.6 million in cash, cash equivalents, restricted cash and marketable securities. Cash used in operations during the quarter was $23.9 million compared to a use of approximately $2.5 million in the prior year quarter, driven by higher net loss and increased cash used in working capital.

Combined with higher capital expenditures, free cash flow was negative $28.1 million in the quarter. As we have stated in previous quarters, we expect our free cash flow to fluctuate from quarter-to-quarter given the timing of customer and vendor payments.

Before we turn to our forecast, I'd like to take a few moments to discuss what we are seeing in the marketplace. As Bill remarked, our pipeline remains strong, and we continue to see solid demand for customer engagement solutions.

However, like many of our peers, we continue to experience macroeconomic headwinds across geographies and industry verticals. These challenges manifest in elongated sales cycles, slower new business growth and fewer multiyear contracts. As such, we are continuing to approach our forecast prudently and guide on a risk-adjusted basis.

For the fourth quarter, we expect revenue to be in the range of $95 million to $96 million, which represents a year-over-year growth rate of approximately 36% at the midpoint. While we're not providing specific gross margin guidance, we expect gross margins will be impacted by seasonally higher activity during the fourth quarter.

Fourth quarter non-GAAP operating loss is expected to be in the range of $18.5 million to $19.5 million.

Fourth quarter non-GAAP net loss is expected to be $17.5 million to $18.5 million with fourth quarter non-GAAP net loss per share in the range of $0.18 to $0.19 per share based on approximately 97.5 million weighted average basic shares outstanding during the period.

For the full year 2023, we expect total revenue to be in the range of $352 million to $353 million, which represents a growth rate of approximately 48% year-over-year at the midpoint. We're pleased to be able to raise our full year revenue outlook. But given the dynamics I discussed, we believe it's prudent to do so only modestly.

Fiscal year 2023 non-GAAP operating loss is expected to be in the range of a loss of $71.5 million to $72.5 million. Non-GAAP net loss for the same period is expected to be in the range of a loss of $64.5 million to $65.5 million.

Fiscal year 2023 non-GAAP net loss per share is expected to be a loss in the range of $0.68 to $0.69 per share based on a full year share count of approximately 94.8 million weighted average basic shares outstanding during the period. In summary, we are very excited about the future of Braze.

We are focused on growing our business, meeting customers where they are on their journey and empowering them to realize world-class customer engagement. Our priority remains capitalizing on our long-term market opportunity, delivering revenue growth at scale and realizing our long-term margin targets in the coming years.

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 McMillan -- excuse me, Ryan McWilliams from Barclays. Please go ahead..

So Bill, what have renewal conversations been like at this point? Glad to hear upsells are strong, but are you experiencing the usual contract increases that Braze historically received at renewal? Thanks..

Thanks for the question. We're moving through renewal conversations at a pretty steady clip, especially here in Q4. And actually, through Q3, we had our lowest amount of available renewable dollars. But we saw those renewal conversations acting for -- across the whole year.

We saw those renewal conversations acting pretty similarly to Q2, we're seeing it in Q4 as well. And as I mentioned, it was a new high watermark for upsells in the quarter. We've got a lot of really robust increases in terms of the new use cases that people are running, expanding into new geographies, expanding into new brands.

So a lot of the cross-sell and upsell motions that we're used to are still intact.

I would say one of the things that we're seeing that's impacting them to the downside is that there are still -- there's a lot of turnover happening within teams as layoffs are happening in other parts of the economy, there has been a lot of M&A type disruption activity.

And so those types of things that we've seen in new business deals that are causing either deal elongation or the delays on decision-making. Those are happening for certain types of expansions within renewals, and so we are seeing that, especially in the more complex multinationals.

But as you heard in the prepared remarks, a lot of the upsell strength actually came out of our global strategic group this quarter as well.

And so I think we're seeing robust signs of great renewal cross-sell and upsell motions across the customer base and around the world, but the portions of upsell that are acting more like new business because they're expanding to a new team and new set of stakeholders, maybe accessing a brand-new net new budget, those are acting more like new business, and we're seeing some of the similar effects that we referenced earlier..

Appreciate the color there. And for Isabelle, we're seeking questions about the sequential step down in RPO in the quarter.

Should we think about a mix higher of percentage of shorter contracts to continue? And how could RPO will fluctuate with more seasonal dollars available for renewal in 4Q?.

Great. Thanks for the question. So yes, you can -- there are more available renewal dollars in Q4. Because we do a number of early renewals, some of those have already been pulled forward, but there are still more today in Q4 than there have been in the other quarters. So that will help. We don't guide on the quarter specifically for RPO.

But yes, it is true that there will be more.

And I'm sorry, what was the first part of your question?.

Should the mix of shorter contracts like contract duration, new bookings continue?.

Yes, we do absolutely expect this trend to generally continue. We think it is part of the dynamic that we are seeing in the context of the macroeconomic environment around us. And we believe it's prudent to expect all of these dynamics that are related to the macro to continue to persist..

[indiscernible] potentially as Braze has continued to grow in its own prominence in the market, that we've been successful at moving more and more of our installed base from one year to multiyear contracts at renewal.

That's something that we'll continue to prioritize in the future, and we continue to see that be robust customers that were on multiyear contracts before, in general, are recommitting to multiyear contracts.

But one thing that we haven't seen as robust in Q2 and Q3 as we have through prior year periods are those people who signed a 12-month deal upfront, more of them are opting to continue on a 12-month deal just because of the environment. But we expect much like we did through a lot of the jitters that were in the economy during COVID.

It moved buyer sentiment toward those shorter contracts. And we saw a reversion of that and people got more comfortable with longer-term contracts once we got out of the depths of the COVID year in 2020. And so we're not overly concerned about that for the long-term health of any of these customer contracts, but you certainly see the impact on RPO..

Our next question comes from Derrick Wood from Cowen. Please go ahead..

Hi, can you hear me?.

Yes, we hear you..

I wanted to ask about greenfield versus displacement activity in kind of this market environment. I think we think of mobile and push being very kind of greenfield use cases while e-mail is often a displacement and often could be even a vendor consolidation message.

Can you just talk about where you're seeing greater demand or greater success across these different go-to-market motions in the market right now?.

Yes. I think that across -- I would think about it more on the lens of established businesses versus emerging businesses because even within -- and when I say that, I'm not specifically talking about young companies versus older companies, but rather new lines of business and new focuses.

And so canonical examples would include streaming companies who -- well, those are certainly displacements of other vendors that may have been sending e-mail for them in the past the use cases are new because the direct-to-consumer investment is net new within the business. And so those operate more like greenfield.

And I think that broadly, when you look across our customer base, that, that characterization of mobile and push being more often greenfield than e-mail being greenfield is broadly true. But at this point, in the maturation of mobile, the vast majority of businesses have something up and running at this point.

And so I think that displacement is something that our teams are very good at. Even if you go back to the early days, we -- we've always operated in a highly competitive market. And so we've been replacing mobile push vendors since 2013 as well.

And I think that throughout our lifetime, it will continue to be a mix of the two with both greenfield and replacement because our vision for Braze and the customer engagement platform and attacking these problems in a customer-centric way, that's not channel siloed means that we're always going to go into an environment that is going to be heterogeneous.

There's going to be certain channels and use cases that are not being covered or maybe not being handled in an advanced way or maybe they're not being coordinated with other places. So we can often simultaneously bring in more operational efficiency and better agility and execution on existing use cases, but unlock completely net new use cases.

which are going to result in, in many cases, increased volume, even if they don't, they definitely result in increased ROI for the business. And we're always focused on the hybrid of those. I think it's very rare that we go in even in a replacement, and we're simply just doing the same use cases before, but with a new technology stack..

Great. And maybe just another go-to-market follow-up question. It sounds like you guys have a new initiative, maybe I got this wrong Start Anywhere, Go Anywhere, and it's maybe a do go-to-market tactic. And we know you guys have been working on some things to ship sales training.

Is that part of that? And could you just elaborate a little bit more on what that change is and how that's helping to maybe drive accelerated ramp to productivity on the rep side?.

Yes, of course, and they are definitely related. Start Anywhere, Go Everywhere is something that I referenced in my keynote at Forge in New York.

And for our customers, it's a commitment that wherever they are in their journey, whether they're a one person team at a prelaunch startup who is ambitious, but maybe not yet sophisticated in modern customer engagement, all the way up to fast scaling start-ups with agile and your disciplinary teams and spreading across the large enterprise where you've got big global teams spreading across functions and maybe reporting to different places, different brands and geographies.

Regardless of the complexity of the team structures we have amazing proof points throughout the entire Brace customer base that the same software platform can come into those organizations. It can empower those teams to drive really great results and really deliver ROI to those customers across the board.

And one of the aspects of that is making really a commitment to the customer base that wherever you live in that spectrum, we're going to meet you where you are. We're going to make sure that you get up and running quickly.

and that we're going to bring you up this on-ramp toward more mature and more advanced customer engagement strategies over the lifetime of your engagement with Braze. And that is also then reflects back internally because from a sales perspective, it means that have the confidence to go and sell to a really wide array of customers.

Indeed, we already have examples throughout our customer base, all up and down both the present day sophistication curve as well as the kind of team size and brand size spectrum.

Any company that really wants to take customer engagement seriously and invest in it is a great customer to take on bras and to bring it into their environment and have it drive additional ROI. It also has implications for our integration and onboarding teams, it has implications for our product teams.

You heard me talk a lot in the past about how a huge part of our product investment is to make sure that we're controlling complexity for our customers so that they can seamlessly move across channels, and they can grow with us all the time.

It's also about making sure that, that on-ramp is very smooth for them so that the integration results in an intuitive environment for them to work in, and it's one that gets delivered very quickly.

Those are also aspects of the macro environment right now, where investments are being made and investment decisions are being made on -- with a return expected on a shorter time horizon and with lower volatility in it.

And so that idea that you can start anywhere whether that's in a single channel or a small set of use cases or with a small team, and we'll get you up and running will get you to that very positive ROI.

And then from there, you're able to compound your gains through the agility that Braze brings and through the increased surface area as you add more use cases, you have more channels, you bring in additional teams, you bring in additional brands, and that's where they go everywhere part comes into play..

Our next question comes from Brian Peterson from Raymond James. Please go ahead..

So first off, I know you guys, during the course of the year, mentioned some sales productivity to efforts that you guys are trying to undertake I know that's kind of hard to unpack that with the macro and everything going on. But I'd be curious to get an update on how those efforts have gone so far..

Yes, absolutely. So we've been happy with the impact of the changes that we've been making over the last 6 months. We've really looked at the entire life cycle of a salesperson here at Braze.

So I rolled out a new 6-week intensive boot camp inclusive of in training and doing role playing with managers, new certifications and a number of other initiatives that have been really impactful in terms of bringing up -- bringing our new account executives up to speed more quickly.

We measure that through time to first deal that they're closing and then continuing to look at the existing sales team, maybe even those that were fully ramped, but recognizing that with the macro environment shifting that buy our priorities have shifted with our product continuing to expand that the surface area that they need to understand is greater and also that we are forging into new areas of our addressable market, which means that we're engaging with new competitors that maybe they would have been unfamiliar with in the past and that the nature of those competitive dynamics certainly change along with the impacts on buyer sentiment that comes the macro.

And so I think there was a recognition early on that there were some basic things that we wanted to make sure that we were getting fixed and adapted, and we talked about those earlier this summer, the switch to the in-person training, the relooking at the onboarding and the boot camps.

Now we're getting to the point where we're digging a layer deeper, and we're seeing really great feedback from the field teams, people empowered to navigate these new competitive environments and navigate the sale of these net new products as we continue to push ahead the pace of innovation.

And I think that's going to be an always on priority for us for sure. It has been most acute through this year because of the convergence of a large number of new sales plus a changing macro environment and a changing competitive environment, plus the expansion of the product.

And obviously, we're not going to see all of those moving parts in every year, but we expect this to continue to be a dynamic environment. And so it's one that we're investing more in for the long term..

Great. I appreciate the color, Bill. And maybe just a follow-up. I know on the hiring going forward is simply that's going to slow down a bit. Or areas maybe where you're still going to be hiring more aggressively? Or is it just kind of a broad-based slowdown? Any way to kind of unpack that a little bit..

Yes. So I'll break that into the hiring over the last few months and then what we're looking at going forward. So we've experienced one of the most robust R&D hiring environments that we've ever seen in our history.

And so that's an area where we've been very excited to continue to build out the R&D teams, and we actually have our kind of new hires and our hiring budget for R&D already signed up and they'll be starting even over the next few months looking kind of further into the future than we're used to from an R&D perspective.

And so that's been awesome to see and you're seeing the fruits of that investment through all the announcements and product at forge and a lot of innovation that will be coming in the coming quarters and throughout next year, which I'm really excited about. We also are still hiring for a number of net new functional leaders throughout the business.

Some of those are -- many of those are concentrated in a newly centralized group around go-to-market strategy and ops. Our aforementioned sales productivity team lives within that new centralized go-to-market strategy and ops group as well.

We brought together within that groups around things like market strategy, looking at territory planning, pricing and packaging, et cetera. So that those can all be co-located together.

We're excited that that's going to be able to improve alignment between those groups, speed up a lot of their kind of operational cadence and be able to ultimately drive better results through a more coordinated strategy.

And so that's a transition in terms of the centralization of that we started embarking on a couple of months ago, and it's one where we're still hiring leaders to make sure that we've got all the right functional expertise in place as we kick off next year.

And then there's going to be a number of other places where we're still looking to selectively take advantage of this great hiring market to bring in really good talent into the company. All that being said, we're definitely making sure that we prepared for whatever the macro throws at us.

We've had great robust hiring results over the last few months. And so we are lowering the level of recruitment activity that we have on a number of other roles just to make sure that we've got better line of sight through the fog that's ahead of us before we start to really step on the gas again..

Our next question comes from Jake Titeleman with Goldman Sachs. Please go ahead..

I'm on for Gabriela. When investors hear about there being a general slowdown in marketing spend and ad spend that obviously makes folks nervous about Braze.

So why are you confident that Braze won't be impacted to the same extent as some of the more traditional players in the space?.

So there's a variety of reasons and a lot of them come down to the nature of the kind of workloads or the use cases that Braze runs for our customers and also the ROI that's associated with that.

And so when you look across the Braze customer base, what you're going to see is diversification across a lot of differences I've already spoken earlier in this call about the diversification that we have across company size, across geographies, across verticals, those -- and then also across use cases.

And a lot of those use cases are also not what I would call discretionary marketing. They are customer communications that are required in order to operate businesses.

And even when those customer communications could be purely promotional by their nature, which is certainly the case for a lot of the Black Friday and Cyber Monday message volumes that we mentioned.

Even within those -- even within those buckets, which you might be able to call discretionary marketing, those are in almost all cases, the highest ROI marketing that a brand that works with Braze can do. Because the investment that they've made that they're capitalizing on is in building up the first-party audiences that they already have.

And so if you think about Braze as an activation investment that sits on top of a much larger investment in building out first-party audiences and first-party data sets.

The ROI function there that pretty clearly starts -- you start to see pretty clearly the difference in ROI versus digital advertising, where in digital advertising, you're not only paying for the activation, but you're also renting the relationship from whoever the ad market place is.

And so the fundamental difference in the ROI function between activating your first-party audiences versus renting a third-party audience and then trying to activate it from there, I think, makes Braze's ROI be really robust even through kind of intense scrutiny Similarly, when you look at the role that Braze pays from an activation standpoint, you see that Braze actually amplifies the ROI that people get out of those advertising investments that they make.

And they also improve the return that they get through the organic growth even if they've cut off all of their digital advertising. I think a lot of the coverage in our space breaks down marketing into two broad buckets.

They'll talk about either acquisition, which is generally associated with digital advertising or with retention, which is more associated with platforms like Braze. Activation is another really important stage there as you go from acquisition to activation, which is roughly -- let's make a great let's establish that habit.

Let's make sure that things like 7-day and 14-day retention remain high, so that you don't have people immediately bouncing off of a product after you spent dearly to acquire them.

And Braze's role to play in that aligns perfectly with the priorities that so many brands are we focusing on right now, which is how do we make sure that our organic growth is activating at high levels.

How do we make sure that the premium acquisition investments that we are making have the maximum ROI that they can and then how are we retaining those people in the long term.

And so in many ways, it's exactly when the scrutiny shows up on the digital advertising spend, that brave really starts to shine versus all of those other expenditures?.

That is very helpful. And then just for the follow-up, can you talk about the momentum that you're seeing with partners? Are you starting to see meaningful interest and pipeline coming from that channel? And maybe Isabel can touch on how this can help with S&M leverage over the long term..

Yes. So our partner ecosystem goes -- is fairly broad.

And so I'll speak specifically to the global systems integrators in response to this question because I think -- it's been a topic over the last few quarters, and it's certainly one that we're really excited about, both for the long-term leverage that you mentioned through sales and marketing efficiency as well as through the pipeline contributions and also just the opportunity to work with a lot of brands that are -- that work with GSIs and without those relationships, those that was -- those were opportunities that we were never previously really able to access.

And so what we've seen over the last 18 months has been an incredible increase in the amount of mind share that we have across the major global systems integrators and the big agency holding companies. The opportunity for Braze to really go into those organizations, establish joint business propositions with them.

We're certifying a large number of the consultants and the integrators and the staff that those companies have on hand.

And many of them are really looking ahead during this period of macroeconomic uncertainty to really figure out when demand comes roaring back, what are what are the investments they're making today to make sure that they're prepared for tomorrow.

I think that when we look across our experience with the GSIs through 2020, even in the early part of 2021, that they were all overcommitted even relative to the staff that they could put on projects since they didn't have the room necessarily to be making forward-looking investments in new technologies.

And we were often squeezed out to our detriment because they had pre-existing relationships with the legacy marketing clouds. What we've really seen over the last year, especially, is that sentiment shifting enormously.

The -- as brands have really led the way, as Braze has continued to move and penetrate deeper and deeper into our global strategic accounts and into our enterprise footprint, it's become very clear that this is the next generation that our partners should be ready to be trained for into service to their customers and to their future customers as well.

And so that incentive alignment and the momentum that exists there is absolutely tremendous. I think that those types of opportunities are not immune to the same new business headwinds that we in the prepared remarks. But we're seeing a lot of really amazing early signs of pipeline generation there.

And ultimately, we believe that as the environment comes back to normal, that we will have made an enormous amount of progress mind share and literal bench strength that is trained and ready to sell on bras, which will ultimately help us with our efficiencies in the long run..

And so just to follow up on your specific question on sort of the impact that we're seeing. We absolutely still think that this is going to be a key driver increased leverage out of the sales and marketing organization. However, as Bill said, between the macro environment and sort of other dynamics, we are still very much in the early days of this.

So -- we look forward to providing sort of more updates as this continues to play out. We continue to be really excited about the leverage and the opportunity that this will present. But I wouldn't look for -- with the macroeconomic environment that we're seeing around us, I wouldn't look for specific direct financial impact in the near term..

Our next question comes from Taylor McGinnis from UBS. Please go ahead..

The revenue upside relative to the guide this quarter was a little skinnier than what we've seen. And I think if you look at the 4Q revs guide at the high end, it implies sequential growth of 3%, which is a little bit below than the like mid-single digits, I think you guys have done in the last couple of quarters.

So -- first, can you talk about the macro environment embedded in this guide? And if there's been any changes in guidance methodology? And then there's a part two sorry, there are two parts. But if you drag, I guess, that 3% sequential growth into next year, you're going to end up at growth below 30%.

So understanding you're not giving guidance today, but any comment on seasonal trends versus macro and linearity? And as we look into next year, just anything to keep in mind..

Great. Thanks, Taylor. So first, I'll just talk about the guidance for Q4. So no material change to how we think about sort of the prudent risk adjustment associated with our guide. So the macro continues to provide a certain level of uncertainty and challenge, and we think that like many of our peers, this is likely to persist.

And so we think it's prudent to continue to include that backdrop as we think about the guide. I won't go into any kind of detail for next year. We'll get back to everybody when we have more visibility as to how Q4 is actually going to land and we'll be part way through Q1. So we'll see everybody back here in March for that announcement.

But we do think that there is -- we are certainly planning for this macroeconomic environment to persist. And that is going to continue to affect the dynamics that we talked about in terms of new business. So we're very pleased with how upsells continue to track, and you can see the dollar-based net retention is holding steady.

But there are -- there's a lot of uncertainty out there. And so we just think it's prudent to incorporate all of that as we think about next year..

Our next question comes from Brian Schwartz from Oppenheimer. Please go ahead..

I've got one for Bill, and then I'll follow up for Isabelle.

Bill, in terms of the expansion activity that's happening, can you talk about the cadence of the upselling that you're saying after you land a customer, if that's changed at all compared to previous quarters versus the expansion and the upselling activity that's happening with your longer-term customers?.

Directionally, I think we have been seeing newer customer cohorts do expand more quickly. There's a variety of reasons for that. One of them was a sales organization, structural change that we made a couple of years ago where we switched from the traditional hunter farmer model across all of our account territories.

We actually shifted more of them over to the named account territories because of the confidence that we have in our ability to land and expand And so there were more cases prior to that, where the hunters were incentivized to land a bigger deal.

Now we've made sure that our sales team is incentivized just get started because we know that we can grow customers more effectively over time. The other thing that drives side is there's just more options in terms of how you can expand your on Braze now. We have more channels.

We have more interesting ways to bring in new data sources got really robust APIs that bring more engineers into the fold and move other sorts of things like transactional use cases on the Braze faster.

Another aspect of that has just been our internal focus on making sure that we're driving time to value results, making sure that customers are getting up and running, that they're sending their first campaigns that they're sending their first campuses quickly.

All the investments that we put into usability as well as the just kind of operational rigor and excellence that we've built out in our integration and onboarding teams over the course of the last couple of years have all sped up those things.

And so I think there's a bunch of structural changes that we've made that really support that in general, new customers cohorts are upselling and expanding faster than prior customer cohorts did.

There are obviously some headwinds on that as well in some cases, especially in the enterprise and especially given Braze's increased prominence and our track record and the customer reference we have.

We do move in and we take out whole opportunities where we'll be cross channel across a bunch of brands and across a bunch of geographies all at the same time. And as you kind of deploy across multiple geographies in enterprise, that can take a long time.

There's also, as I mentioned before, there are parts of cross-sell and upsell that are -- that act more like the business because they involve working with teams. Those are experiencing similar headwinds. And so that -- as we mentioned, for new business -- and so that can be a kind of a takeaway from that.

So there's a lot involved there, hopefully, that helps you understand the dynamics that are at play, but it's certainly a goal of ours to make sure that and this is in line with Start Anywhere, Go Everywhere that we can get customers up and running quickly on early use cases.

We get them working with Braze's vertically integrated data flow and in the Canvas environment. And from that as a springboard, they're able to quickly and easily move throughout the rest of the brace product and be able to really expand and grow with us very seamlessly over time..

Thank you, Bill. And then the follow-up I have for Isabel. Thank you very much for the transparency on what you're seeing in terms of contract durations.

I wanted to ask about pricing and discounting in the current macro environment, if that's changing at all compared to recent quarters? And maybe your comments on what you're seeing, if you're seeing anything in terms of how your competitors are behaving in terms of pricing if they try to navigate these macro headwinds?.

Yes, absolutely. So we're continuing to maintain our discipline around discounting. We continue to see ourselves as a premium product, high ROI and that is reflected in our pricing. So do we see the pricing sensitivity out there in the market? Absolutely.

But we continue to work with the salespeople and continue to train them to talk about the high ROI that the product delivers and the value sell into the customer. So that is incredibly important for us and it has been a discipline that we have implemented over the last several quarters and years, and will absolutely continue.

From a competitive standpoint, I won't claim to know exactly what's going on behind the scenes at all of our competitors. But there is likely more pricing pressure on them.

And certainly, for those that are kind of the pre-IPO guys, they are likely looking to kind of build their books right now and they can likely as a nonpublic company is there potentially trying to win on price. It's probably not the right strategy for the long term, but we're going to continue to be disciplined..

Our next question comes from DJ Hynes from Canaccord. Please go ahead..

I'll ask just one, just given the time, I see a bunch of hands still up. Bill if a customer comes to you and says, "I need to cut costs, which I guess could mean lean out MAUs, narrowing channels, sending fewer messages.

What are the levers you can pull to try and preserve contract value? Like what's the playbook in that scenario?.

Yes. So this comes up not just because a customer is looking to cut costs, but sometimes the customers own projections around how their volume growth will transpire over the course of a term might be too high, and so we find them at renewal underpacing utilization and things like that.

And so this is something that our sales team is used to work and definitely an aspect of how the business runs with our contracts and the way that we sell entitlements. And so there's a lot of different levers. In any given your contract term, we've -- when you look out over the last several years, we've added one or two channels every single year.

We add new data connectors. We've added new predictive capabilities got -- there's a lot of ways that the product surface area has expanded over time. There's also usually when you look out over an annual contract entitlement, even if they didn't hit their growth numbers in a given year, they still expect to grow into the next year.

And we want to make sure that they're set up with predictable costs across whatever the term period is. There's also the unlocking of new use cases and the engagement with new teams.

And so in many cases, when we land with a customer, even if they move over a specific channel, they often -- or they sometimes don't even move like all of the e-mail happening in their organization over to us.

or they might not move all of their SMS or what have you, maybe they started with a specific use case, but they've proven out the value of those other ones. And so we find ourselves consolidating other vendors quite a bit when we go into that conversation.

And so they're looking to decrease their spend overall across their basket of marketing technologies, but brave because of the gravity that our platform has to pull in new use cases and new channels over time. Often, we can consolidate out other vendors as they're working to find spend efficiency.

Another area that we see people finding spend efficiencies as they lean into their usage with Braze more is through the Audience ink products that I mentioned during the prepared remarks, where we help them optimize the digital advertising and acquisition spend and our customers have seen tremendous results there.

I think there's a lot of low-hanging fruit just because a lot of low-hanging fruit in that entire category because first-party data has historically not been activated to the that it can or should be for a lot of digital advertising and acquisition strategies.

And so Well, in addition to the kind of internal to Braze contract levers that I mentioned before, there's also an entire category of just taking a step back, looking at their entire marketing spend and helping them optimize that in order for them to be able to maintain or, in many cases, in those situations still increase their Braze investment..

Our next question comes from Brent Bracelin from Piper Sandler. Please go ahead..

I'll keep it one as well for the sake of time. I wanted to follow up and double click into the upsell momentum this quarter.

Given increasing macro pressure on marketing budgets, what is driving the upsell momentum? How sustainable is it? Is it a function of how the product is priced by an MAU basis? Is it vendor consolidation? Is it this first-party data category just being less sensitive to budget cuts? Just trying to double-click into what is actually driving that up so momentum? Any color there would be helpful..

Yes. So I think first of all, your list of options are all accurate. I will endeavor to kind of organize them by the magnitude of the impact.

I think, first and foremost, the -- when you -- if you were to stack rank the ROI of the investments made in any given marketing organization, that those that are operating on top of first-party data and first-party relationships are always going to be head and shoulders above the investments being made on top of third-party audiences.

And I talked through some of the reasons for that before, but the high level is that those first-party relationships are a giant asset. And the only thing that they really need to pay for is the ability to activate that asset. The investment in many cases, has already been made. And so when you're looking to optimize ROI, that's an easy place to start.

Another important aspect of it is the vendor consolidation, which I just talked about through -- when I talk through the way that a renewal often runs as well as continued use case expansion. And then there are a lot of businesses out there that are also still growing.

You'll we actually had in this quarter the sequential messaging and MAU growth from the prior quarter to this one, were both higher this year than they were last year. And so we are seeing robust growth in terms of the amount of just digital activity happening out there amongst our customer base.

And so even though there is pressure on spend, and we are seeing certain areas where there are headwinds and growth for certain categories.

Remember that BRACE is a highly diversified product that sells across all different verticals, all different company sizes and all the geographies around the world, and there are a lot of areas where growth is still robust, and we're seeing great upsell motions through those..

Next question comes from Pinjalim Bora from JPMorgan. Please go ahead..

Congrats on the quarter. One quick one for you, Bill. What are you hearing from customers when you're talking about marketing budgets and customer engagement budgets for next year what are you hearing? Are they thinking about resetting them lower? Is it -- does it seem to be more resilient from their point of view? Any color would be helpful..

Yes. I think we're seeing broad-based sentiment where businesses are just trying to become more efficient in the spending that they're doing -- we're seeing technology leaders getting involved in a lot of the kind of marketing decisions as well and helping to rationalize the footprint of products that are out there.

I think there's probably been a lot of shelf were purchased across people's environments over the last couple of years.

It's one of the reasons that -- we've always been really focused on time to value, making sure that no integration gets left behind and that we are getting all of our customers up and running early in their annual contract life cycles.

But we're definitely hearing from a lot of brands that they're kind of cleaning out the craft, if you will, from a lot of their software spend. We also are seeing that sentiment obviously shift or varying a lot by market, by industry and by geography.

And I don't think that I could say that there's a broad-based like we want this to be higher or lower or the same as last year. It's really a focus on efficiency and making sure that when they're making new investments that those are delivering value to them quickly..

Next question comes from Pat Walravens from JMP. Please go ahead..

Great. Isabelle, can we go back to the earlier question about sequential growth, as you probably followed, investors just went through this with the Zoom Info. So I'm just wondering, is sequential growth that you guided to a good starting point for how to think about next year. And if not, why would sequential growth not be a good indicator..

Thanks for the question. So again, I'm not going to answer specifically how to think about how sequential growth going into Q4 relates next year. I think there's enough uncertainty out there. We are extremely confident with our long-term prospects.

And right now, we are continuing to see the dislocation associated with the challenging and uncertain macroeconomic environment. What I will say about Q4 and the guide is we continue to approach this with a similar methodology to prior quarters and embed an appropriate amount of risk adjustment.

And so as we continue to navigate this uncertain environment, that type of risk adjustment is appropriate and necessary. And we look forward to having more clarity coming out of Q4 and being part of the way through Q1 to give more specific guidance for FY '24..

And our next question comes from Rachel [ph] from William Blair..

I was curious as to what you're seeing in terms of the competitive landscape? I know Salesforce just recently announced their customer data cloud, Genie and then Twilio Engage is now generally available.

So just curious if there's any changes as to who you're running into and if there's been any impact on win rates?.

Yes. I think amongst the more established players in the space and the legacy marketing clouds. We haven't seen much difference over the last several quarters, even as they've made new product announcements. And I'm not going to speak too much to those specific competitors.

But I think that when you look at the pace of product innovation in Braves and just the pace of customer pickup of new use cases and how we continue to advance our customer community.

Then all those things come together to create a really robust offering that's really current with the skill sets that people have that's allowing them to really take advantage of the new investments that they're making in their data ecosystems and the new skill sets that they're investing in within their own teams.

When we look across the legacy marketing cloud space and some of the -- some of the other fast follower, even start-up competitors that we have. We just don't see the same level product vision. We don't see the same level of R&D investment and they're built on architectures that are antiquated for the environment that we're trying to operate in.

And so even as we continue to see like our legacy market cloud competitors try to overlay their older marketing cloud software platforms new shiny things that are meant to be able to more tightly integrate them together or what have you. The foundations of those products are still the same and so they still continue to have the same issues.

And as we continue to push forward, we certainly respect a lot of the kind of incumbent and scale advantages that they have within the market, and those are really important for us to navigate.

But from a product R&D standpoint, I feel really good about where we are positioned relative to the competition, especially when you look at just the velocity of what we're -- what we are actively announcing and releasing..

And our final question will come from Yun Kim from Loop Capital. Please go ahead..

All right. So I'll make a quick last one here. new customer add in the quarter was much healthier than last quarter.

Was there any specific change to the go-to-market to better execute on the new customer acquisition front, maybe anything on the product bundling that you are doing to entice new customers? Just want to get a better understanding of new customer add in the quarter?.

Yes.

So I'll first clarify that the new pricing and packaging that we're experimenting with is part of Start Anywhere, Go Everywhere didn't have a big impact in the quarter -- so it's something that we're piloting with a small set of account executives and we're excited to see that play a bigger role into next year, but you didn't see that in Q3 specifically.

And then in terms of net new customer adds, I think that, as we've mentioned before, the pipeline is very robust and healthy.

We've been seeing a lot of great new opportunities showing up, both inbound as well as a lot of our outbound execution, paired with the resumption of in-person events and a lot of other really exciting things that have happened in the pipeline. And you saw that translate into a healthy number of net new customer adds in Q3.

Obviously, part of that is also tied to the work that we're doing from a sales productivity investment standpoint getting our new account executives up and running more quickly, helping our more tenured account executives, navigate landscape, more adeptly, and those things have helped with that new customer adds as well.

But we also, as we mentioned in the prepared remarks, we're seeing those new business headwinds. And so it's been a difficult environment to fully predict exactly where metrics like that are going to land in a given quarter..

This concludes the Q&A. Thank you all for your questions. I'll pass back to Bill for closing remarks..

I just want to thank everyone for your continued support. Thanks for joining us today and for the great questions after the prepared remarks, and we will see you again next quarter..