Braze, Inc. (BRZE) Q1 2025 Earnings Report, Transcript and Summary

Welcome to the Braze First Quarter Fiscal Year 2025 Earnings Conference Call. My name is Megan, and I'll be your operator for today's call. [Operator Instructions] I'll now hand 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 2025. 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 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 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, 2024, and the fiscal year ended January 31, 2025, the anticipated development, performance, and benefits of our products and features, the potential impact and duration of current macroeconomic trends, our anticipated customer behaviors, including vendor consolidation trends and their impact on Braze, the timing and benefits from our global expansion efforts, our potential market opportunity, the expected effects of our social impact initiatives, 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 2025 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 are pleased with our first quarter results, which again demonstrated the strength of the Braze customer engagement platform in a challenging macroeconomic environment. We got off to a solid start to the year, generating $135.5 million of revenue, up 33% compared to the prior year. Excluding the $750,000 impact of a service outage we experienced in April, revenue would have been approximately $136.3 million. This quarter we again demonstrated strong leverage, improving non-GAAP operating margins by over 800 basis points year over year and generating strong cash flow from operations of approximately $19 million, driven by collections on our fourth-quarter bookings. As we progress through 2025, we plan to continue investing to support our top-line growth and our long-term opportunity, all while staying focused on improving our efficiency and hitting our profitability goals. 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 customer count by 58 sequentially to a total of 2,102 as we continue to win against legacy marketing clouds and point solutions with our industry-leading platform. Our enterprise business was strong, with $500,000 plus ARR customers continuing to grow, rising 29% year over year to 212. Notable new business wins include Bauer Media Group, Bolt Technology, Country Road Group, Leonardo.ai, Property Finder, Solaris Bank AG and many others. Notable upsells in the quarter include Etsy, Lime, MyEyeDr., Talkspace, and the rewards credit card Yonder. In the quarter, we again benefited from the vendor consolidation trend that we have highlighted in recent quarters, securing new business wins that simultaneously replace legacy marketing clouds, channel-specific point solutions, and homegrown tools across diverse customer examples including a German e-commerce brand, an Australian fintech app, a specialty fashion retailer in APAC, and an American workforce management solutions firm. These are just a few examples of the many in which Braze replaced legacy marketing clouds, siloed point solutions, and regionally fragmented technical architectures, as brands look to combine capabilities and centralized administration of their customer engagement technology ecosystem. We believe that both the legacy replacement cycle and vendor consolidation trends can lead to share gains for Braze as brands look to capitalize on new AI driven advancements in customer engagement capabilities. As marketers become increasingly agile, ambitious, and experimental with their customer engagement initiatives, we believe Braze stands to benefit and position itself as the dominant player in customer engagement while delivering increased relevance and personalization to consumers at scale. As we've stated on previous calls, even as we are pleased with our execution, the macro environment remains uncertain. We have not seen a meaningful improvement in the qualitative characteristics of our demand environment and continue to see cautious buyer behaviors, long decision-making cycles, and enhanced scrutiny on both budget and personnel resources. However, we remain confident that the cultivation of strong and well-understood first-party customer relationships will continue to rise in value and importance for modern brands. As we all embark on the third year of operating through an environment with heightened interest rates, brands must continue their value-conscious focus on high ROI initiatives like lifecycle optimization and retention, both core strengths of Braze's primary offering. Building on that foundation and looking into the future, we believe that it takes much more than optimizing existing strategy for brands to remain competitive, particularly as more industries are turned upside down by the dual forces of globalization and rapid technological change driven by AI and enhanced by the continued convergence of our digital and physical lives. And this is why we continue to invest in R&D to drive innovation in the Braze customer engagement platform. We are relentlessly focused on using product innovation to enhance our competitive differentiation, gain market share, and accelerate the enterprise consolidation and replacement cycles. As we grow, we are also expanding the global community of Braze-trained marketers and customer engagement professionals, strengthening a long-term moat rooted in the adoption of a sophisticated, interdisciplinary, and cross-channel approach to marketing that is driven by first-party data, enhanced by agility, experimentation, and AI, and comprehensively applied throughout the customer lifecycle. With a long-standing focus on enhancing marketer productivity, we launched an early version of our AI copywriting assistant last year and has been adopted and effectively employed by hundreds of customers. We recently expanded this feature set with on-brand copy generation, allowing customers to quickly customize new cross-channel campaigns by using retrieval-augmented generative AI to mine their historical Braze campaign content and automatically generate new message variants, all while keeping strong guardrails on the GenAI outputs to maintain appropriate brand personality, reputation, values, and voice. This pairs well with our generative Tone Control feature, which helps marketers adapt and control the tone of AI or human-generated copy throughout Braze. And we have increasingly seen customers using both features in tandem to save time in content production and create more authentic brand experiences, all while eliminating marketing missteps. As we continue expanding Sage AI, we are doing so carefully and methodically to ensure that we are also increasing marketer confidence in the quality of automatically generated outputs and orchestration decisions. We believe that success on this path will lead us to a future where marketers can trust Braze to fully optimize the orchestration, relevance, and personalization dimensions of their first-party data investments and customer engagement strategies. While we continue injecting AI throughout our platform, we are also hard at work to evolve and expand Braze's channel selection in order to maximize the value that our customers can derive from the sophistication available further up the Braze stack. We've spoken a lot about SMS and WhatsApp in the last few earnings calls, and today I wanted to highlight recent evolution in a channel that Braze has supported since our founding, Mobile Push Notifications. Most iPhone users have by now experienced the power of live activity notifications. iOS17 upgraded live activities, and they now allow for persistent real-time updates right on the lock screen to keep users informed about deliveries, rideshare status, sports scores, and other time-sensitive activities. Relying on our SDKs and vertical integration, Braze makes it simple for brands to use live activities, allowing them to easily update and manage the activity lifecycle using real-time first-party data, while also taking advantage of our advanced targeting, testing, orchestration, and personalization capabilities. In addition, Braze makes it easy to pair live activities with other channels like in-app messages and content cards, advancing a brand's cross-channel engagement strategies. This feature is particularly exciting for brands in media, entertainment, sports, and gaming, where live activities help fans keep apprised of the in-the-moment updates for events like the ongoing NBA or NHL playoffs, or the T20 Cricket World Cup and even the Olympics later this summer. These are just a few examples of the myriad of enhancements we have been adding in order to enhance our platform and help our customers drive higher ROI. We believe these are efficient investments in our future and will help drive additional usage and new customers to Braze in the coming quarters and years. Zooming out to look at our operational footprint, we are also excited by the increasingly global nature of our addressable market and continue making investments to support Braze's growth with an expanding roster of multinational brands. In the enterprise, this opportunity is enhanced by both the technology consolidation trend that I referenced earlier and by the continued expansion of enterprise direct-to-consumer offerings into new and fast-growing markets, particularly in regions like APAC and LATAM. In May, we announced progress on our planned team and office expansions into Sao Paulo, Bucharest, Dubai, and Seoul. The month prior, we announced our plans to open a new data center in Indonesia, our second non- U.S. data center and our first in APAC. We expect this investment in our global data center footprint to accelerate in future years, enabling us to better navigate the increasingly complex data residency and privacy landscape, particularly for our customers and prospects in heavily regulated industries such as financial services, healthcare, and the public sector. We've also continued making localization investments that make life easier for marketers working across multiple languages or diverse regions. Recently, we launched major upgrades to our multi-language composition capabilities, allowing customers flexible workflow options to manage translations, test and preview multi-language messaging, and derive new data insights across locales and languages. We also announced availability of the Braze Dashboard in Spanish and Brazilian Portuguese, and have made enhancements to the existing Japanese and Korean dashboard and documentation translations. Braze has operated globally from its early years and revenue outside the U.S. continues to be a substantial portion of our total at 44% in the current quarter. As we look to the future, we see large greenfield growth opportunities in these fast-growing global markets and are excited to be preparing for that future today. You may have also seen that just this week we added Yvonne Wassenaar, a seasoned SaaS executive, to our Board of Directors. For over 30 years, Yvonne has advised leaders on scaling, diversifying, and transforming their businesses throughout the Americas, Europe, and Asia. She replaces Doug Pepper, who served on our board for nearly a decade and he will remain on the team as a board observer. We look forward to all the contributions Yvonne will make to Braze's strategy and next stage of growth. Before I turn it over to Isabelle, I'd like to update you on our latest ESG initiatives. We are excited to announce that Braze has formally committed to setting a near-term science-based target of reducing our carbon emissions, marking a significant step in our sustainability journey. This commitment aligns our emissions reduction targets with the global goal of limiting warming to 1.5 Degrees Celsius above pre-industrial levels, in line with the UN Paris Agreement. By committing to setting a science-based target, we pledge to reduce our greenhouse gas emissions in line with the latest climate science. We will be publishing our third annual ESG report and launching our ESG microsite later this summer. I'll close my remarks by reiterating our confidence and excitement in the simultaneous execution of our long-term growth, efficiency, and profitability goals. Difficult execution environments enhance the opportunity to create long-term differentiation and separation from our competition, and we are committed to capitalizing on this time to solidify our position as a global leader in customer engagement. Thank you for your interest and support in Braze. And now I'll turn the call over to Isabelle.

Thank you, Bill, and thank you, everyone, for joining us today. As Bill stated, we reported a strong first quarter, with revenue increasing 33% year over year to $135.5 million, driven by a combination of existing customer contract expansions, renewals, and new business. Revenue was negatively impacted by a revenue reserve of approximately $750,000 related to a service outage we experienced at the end of April. Excluding the reserve, revenue would have been approximately $136.3 million. Revenue also included a contribution of slightly more than $3 million from the NorthStar acquisition, which closed on June 1st of last year. Subscription revenue remains the primary component of our total top-line, contributing 96% of our first-quarter revenue, while the remaining 4% represents a combination of recurring professional services and one-time configuration and onboarding fees. Total customer count increased 13% year over year to 2,102 customers as of April 30th, up 236 from the same period last year and up 58 from the prior quarter. Our total number of large customers, which we define as those spending at least $500,000 annually, grew 29% year over year to 212, and as of April 30 contributed 60% to our total ARR. This compares to a 57% contribution as of the same quarter last year. Measured across all customers, dollar-based net retention was 117%, while dollar-based net retention for our large customers was 119%. Expansion was again broadly distributed across industries and geographic regions. Revenue outside the U.S. contributed 44% to our total top line in the first quarter, compared to 43% in the prior year quarter and 44% in the fourth quarter of fiscal year 2024. In the first quarter, our total remaining performance obligation was $657 million, up 38% year over year and up 3% sequentially. Current RPO was $420 million, up 29% year over year and also up 3% sequentially. The year-over-year increases were driven by contract renewals and upsells, and the signing of new customer contracts. Overall, our dollar-weighted contract length remains at just over two years. Non-GAAP gross profit in the quarter was $91.9 million, representing a non-GAAP gross margin of 67.9%. This number was impaired by 20 basis points due to the one-time revenue reserve related to the April outage. This compares to a non-GAAP gross profit of $70 million and non-GAAP gross margin of 68.8% in the first quarter of last year. The modest year-over-year decline in the margin percent was driven by increased adoption of premium message channels and the impact of the one-time revenue reserve attributable to the April outage partially offset by ongoing personnel efficiencies and the continued cost optimization of our technology stack. We continue to realize strong leverage across our three operating expense buckets, making meaningful progress towards the long-term targets outlined in our 2021 IPO and reiterated at our 2022 Analyst Day. Non-GAAP sales and marketing expenses were $59.8 million, or 44% of revenue compared to $49.3 million or 48% of revenue in the prior year quarter. While the dollar increase reflects our year-over-year investment 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. As a reminder, our long-term sales and marketing percent of revenue range is 23% to 25%. Non GAAP G&A expense was $19.4 million, or 14% of revenue compared to $17.1 million or 17% of revenue in the prior-year quarter. While the dollar increase was driven by investments to support our overall company growth including headcount costs and increases in software subscription and licenses, we continue to make progress towards our long-term non-GAAP G&A percent of revenue target of 8% to 10%. Non-GAAP R&D expense was $22.7 million, or 17% of revenue compared to $19.6 million, or 19% of revenue in the prior year quarter. The dollar increase was primarily driven by increased headcount costs to support the expansion of our existing offerings as well as to develop new products and features to drive growth. R&D as a percent of revenue declined by fewer basis points relative to the other operating expense line items, which reflects our intentional yet disciplined reinvestment in our technology stack as we approach our long-term non-GAAP R&D percent of revenue target range of 13% to 15%. Non-GAAP operating loss was $10 million or 7.4% of revenue, compared to a non-GAAP operating loss of $16 million or 15.7% of revenue in the prior-year quarter. Non-GAAP net loss attributable to Braze's shareholders in the quarter was $5.5 million or a loss of $0.05 per share, compared to a loss of $12.6 million or a loss $0.13 per share in the prior year quarter. Now turning to the balance sheet and cash flow statement. We ended the quarter with $487.7 million in cash, cash equivalents, restricted cash, and marketable securities. Cash provided by operations during the quarter was $19.4 million compared to $22.5 million in the prior year quarter. Including the cash impact of capitalized costs, free cash flow was approximately $11.4 million compared to free cash flow of $21.7 million in the prior year quarter. The first quarter's free cash flow includes capital expenditures of $5.8 million associated with opening the company's new New York headquarters. And as we have noted in the past, we expect our free cash flow to fluctuate from quarter to quarter given the timing of customer and vendor payments. Before turning to the forecast, I'd like to briefly comment on the macroeconomic environment. As Bill noted, we continue to operate in a challenging selling environment characterized by constrained marketing budgets and greater buyer scrutiny. Our guidance assumes that the environment does not change in fiscal year 2025 and as always, we approach our guidance with a prudent and risk-adjusted methodology. For the second quarter of fiscal 2025, we expect revenue to be in the range of $140.5 million to $141.5 million which represents a year-over-year growth rate of approximately 23% at the midpoint. Second quarter non-GAAP operating loss is expected to be in the range of $6.5 million to $7.5 million. At the midpoint, this implies an operating margin of approximately negative 5%. Second quarter non-GAAP net loss is expected to be $3 million to $4 million and second quarter non-GAAP net loss per share in the range of $0.03 to $0.04 per share based on approximately 101.5 million weighted average basic shares outstanding during the period. Please note that for the full fiscal year 2025, all guided metrics include the negative impact of the Q1 revenue reserve. For the full year 2025, we expect total revenue to be in the range of $577 million to $581 million, which represents a year-over-year growth rate of approximately 23% at the midpoint. Fiscal year 2025 non-GAAP operating loss is expected to be in the range of $19.5 million to $23.5 million. At the midpoint, this implies a non-GAAP operating margin of approximately negative 4% or more than a 450 basis point improvement versus fiscal year 2024. Non-GAAP net loss for the same period is expected to be in the range of $6 million to $10 million. Fiscal year 2025 non-GAAP net loss per share is expected to be $0.06 to $0.10 per share based on a full-year weighted average basic share count of approximately 102 million shares. We remain on track to achieve positive quarterly non-GAAP operating income and positive free cash flow in Q4 of this year. I'll wrap my remarks by reiterating our commitment to delivering world-class customer engagement solutions while effectively managing costs to achieve our profitability 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 Derrick Wood with TD Cowen. You may now unmute your audio and ask your question.

Great, thank you, and congrats on a solid quarter. First question for Bill. You guys were called out at Snowflake's keynote this week as a notable strategic partner. Can you give us an update on how you're working with Snowflake from a technology and go-to-market standpoint? Maybe just give us a sense around demand for your cloud data ingestion capabilities. And now that you have Sage AI and bring that to more data flows, how customers are looking to leverage that capability?

Yes, absolutely. And really happy to expound on that as Snowflake has been a really important, both technical and go-to-market partner for us for several years now. As you're probably aware, we were very early adopters of Snowflake data sharing. We were on stage with them when they announced that to announce our interconnection. And that was really the beginning of Braze embracing our role not just as a consumer of data, but also as a producer of data. When we send trillions of messages in a year, we're also producing a lot of very valuable engagement data that we use, not just to train our own AI and machine learning and automated decision-making processes, but that our customers also use when they're doing their own bespoke development. That cycle then gets completed when you pull data back into Braze, through things like cloud data ingestion, and through a number of other extensions that we've added to capabilities like our segment extensions and our product catalog, automatic syncing, which are all working toward a goal of making sure that the data that Braze needs to make decisions is available to us quickly, completely, and with a low total cost of ownership. And so, as Snowflake has continued to expand their own capabilities and expand their options for being able to move data in a fully managed way in and out of partners like Braze, we've been quick to adopt all of those capabilities throughout, and that, of course, has also helped drive the go to market partnership as well. When Braze and Snowflake are deployed together in an environment, Braze customers can do more with more comprehensive data, they can deploy more use cases more quickly, and the ongoing burden to primarily their technical teams of maintaining those data pipelines goes to near zero because it's handled between Braze and Snowflake directly. And so it creates a win-win-win condition where Snowflake is getting stickier customers with more usage. Braze is getting more comprehensive view of data more quickly and more completely, which lets customers deploy new use cases and try new ideas for personalization or targeting intelligence or orchestration or what have you. And together we're able to realize that vision of being able to be consistently acting on a complete and current picture of a customer's context as we're engaging with them to try to shape their journey toward more positive outcomes.

Okay, great. That's great color. Isabelle, one for you. Can you talk about just growth trends and monthly active users? I believe this makes up roughly half of contract structure for your customers. Just wondering what you're seeing at renewals and how you're thinking about renewal behavior and the direction of MAU growth through the year, given the kind of continued mixed data points around the macro.

Yes, thanks for that. So look, we've said this a few times, we don't sort of focus overly, we don't overly scrutinize the focus here on the MAU growth. And actually, if you look at our MAU growth, our revenue growth has been outpacing MAU growth for quite some time. And so we are -- and actually, if you look in our disclosure, something that's happened actually about Q2 of last year is we reverse the order of what comprises our top line. And so we used to say that MAU was the single largest component of our top line. Actually, now it's the premium messages, the messaging that folks pay for. And MAU has moved to kind of second in the ordering. And so we don't worry so much about the contract composition. We're really just trying to create contracts and structures that work best for our customers, for them to be able to use the product to the best of its ability and to maintain that high ROI that Braze delivers on a consistent basis.

Understood. Okay, thank you.

Our next question comes from D.J. Hynes from Canaccord. Please unmute your line and ask your question.

Hi, guys, congrats on the next quarter. Bill, you alluded to the outage a couple of times in talking about some of the revenue impacts. I know the blog post did a really nice job kind of going deep on the technical explanation of what happened. I'd love to just hear kind of what the customer reaction has been to your response to the outage. Like is there any brand tarnish we should be worried about here? Just what has the feedback been since that?

Yes, of course. And for those that are not aware, we had a large outage. It happened right at the end of April, which was also right at the end of Q1, and it was actually the longest full outage in our history. And as you just mentioned, we rapidly published a full postmortem on our blog and I would encourage anyone interested to read that blog post. I think that the reaction afterward has been -- for most customers, it's been one of understanding I would say. Technical systems, no matter how resiliently you build them, experience novel failure conditions, and throughout the entirety of the outage, we communicated with urgency, with reliability, we didn't always have the answer that people wanted because the systems were down, obviously, but we were as transparent as we could be. We got -- there was a full recovery. There was no data loss. Our failover systems -- the failover systems all operated as intended, which was great to be able to see, and we ultimately were able to have the system be fully healed. And it's been stable ever since that incident. I'm knocking on wood in the room right now. And so I think that it's one of these circumstances where it's a big deal. It's unfortunate that it happened, but I think that what our customers were able to see is how we really operate through a difficult circumstance. And we did so with integrity and transparency and honesty. And, I think that in the long run, that can be a very helpful thing. One of the other things that I would say is that, we obviously learned a lot from working through the incident, had been able to make a number of changes to both harden our systems and enhance our ability to recover rapidly when issues do arise because both things were at play in this outage. We experienced a novel failure condition that caused our failover capabilities and our secondaries to not be able to invoke themselves. And then the systems were not able to self-heal due to the novel nature of the failure. And then the amount of time that it then took to recover from that led to a long recovery period, as well as our systems needed to catch up on literally billions of jobs that were backlogged, that represented either data to be processed or messages to be sent, or both. And so, as I mentioned, there's good news there, and that data was never lost, and that many other parts of the system came back up sooner than the full recovery. But one of the other things that I would celebrate as an outcome is that while the recovery was happening, we actually successfully brought online more infrastructure than we've ever had simultaneously online by a factor of almost 50%. And so that means that a huge amount of the work that we've done on the DevOps front, from a scalability and observability and monitoring perspective, as well as just generally, the automation around that, all of those systems has all been a very successful investment for us to be able to not just operate, but recover from these novel circumstances. And in many ways, this was actually a stress test for what are going to be some really big events later this year as we look ahead to things like the Olympics and the U.S. Presidential Election and Black Friday, Cyber Monday. We had more infrastructure online as we recovered from this outage than we anticipate probably even bringing up for Black Friday later this year.

Great. Yes, that's a super helpful explanation. And then, Isabelle, a follow-up for you. I just want to hit on NRR dynamics. I mean, it's great to see the blended metric has seemingly stabilized, the enterprise, the large customer continues to drift a little bit lower. Just curious what's driving that. Is it that the enterprise kind of started to see macro pressures maybe a little bit later than SMB, and we're still kind of feeling the tail effects of that in the trailing 12 month metric? Or maybe you could just speak to kind of expansion dynamics, enterprise versus SMB. It just sounds like enterprise is a lot healthier.

Yes, sure. So I think, first of all, I will say that on a rounded basis, the consolidated company did appear to hold up. It is down on an unrounded basis. So I sort of just indicate that there are. We are still continuing to see some levels of pressure at sort of the rest of the organization. And I would say that embedded in our guide is an assumption that this number has not hit the floor yet. And so that I know that question is probably coming. So I will just preempt that this number has not hit the floor yet, and that is absolutely embedded in our guide. So I think when we think about the enterprise, there's a couple of additional dynamics at play. Remember that the way we count a customer is at the ultimate parent level. And so when we do an upsell with a new brand within an existing parent company, that counts as positive dollar-based net retention. It is hard these days, it is just as hard to do that new -- that upsell, that behavior behaves a lot like net new business because a lot of times it's new budgets, it's new stakeholders, it's a new process. And so the dynamics that we're seeing relative to the broader macro, we faced them equally in that upsell motion within the enterprise. So you're definitely seeing that at play. In addition, we're still working our way out of some contracts that had previously bought for some expected higher levels of growth and therefore at renewal maybe you're not seeing the same level of upsell in that moment because they had purchased for already a higher level of growth and are still working their way into those volumes.

Yes, makes sense. Thank you guys for the color.

Our next call comes from Ryan MacWilliams from Barclays. Please unmute your line and ask your question.

Excellent. Thanks for taking the question. Bill, I know it's still early days here, but some of your advanced customers who are already incorporating generative AI into their marketing content or their marketing process. Are you seeing these customers run more campaigns or utilize the Braze platform further as a result of generative AI adoption at this point?

Yes, it's a great question. And I think that the things that are enhancing marketer productivity, we absolutely see our customers moving through their own roadmaps for customer engagement more quickly, and we're also seeing people test and experiment more often. You've heard me talk about this a lot in prior earnings calls, which is that one of the key areas of differentiation in Braze is really how much a team stands to gain when they are consistently experimenting with new variants, new engagement strategies, new tones of voice, new personalization concepts, new orchestration ideas, incorporating in different channel mixes. These are all things that sound great on paper, but do take a lot of work to actually go and execute. And we know that when our customers execute on these more sophisticated and more experimental approaches, and they do so in an agile way, they compound results. They certainly find the differentiation in Braze that not only justifies but really pays back our premium price point in a very meaningful way for them. But the amount of effort required for that, especially in the current environment where a lot of these teams are not growing, some of them are shrinking, they don't have a lot of resourcing available to bring in outside agencies, et cetera, that the tools of generative AI have been really important productivity enhancers for them to be able to do the same with less in many cases, or do more with the same team for those who still have a constant amount of resourcing in their teams.

Appreciate that. And then how is the rollout of new pricing and packaging around premium messaging channels going at this point? Are you seeing more customers testing new channels as a result? And have you noticed any trends in the mix in channel usage with your customers so far this year between push, email, SMS? Thanks.

Yes. So the rollout of the credits program has been successful so far, but the official transition to message credits only went live May 1st. So we only have about a month of data. I would say that early indicators are that it is absolutely working as expected in the sense that a customer doesn't need to process a new order form or go through a new buying cycle just to experiment with a new channel, and that is leading to them being able to experiment with those new channels. If you'll recall, the way that we were selling global SMS before as well, was on a country-by-country basis. And so when I say new channels, I also would include in that simply just sending to all of Europe as an example, when maybe you would have only purchased a small number of countries in the past, or otherwise engaging with that kind of global premium audience. Overall with the margin profile, I would say that on the SMS front, we're continuing to see similar dynamics as we've spoken about in the past. Definitely, the competition amongst the CPaaS providers is giving us a bit more room to be able to negotiate with those vendors, but nothing that's structurally changing that. I also, just take this opportunity because I'm sure this will come up later around the WhatsApp side. Meta actually made an announcement earlier today in a direction that we previously predicted, which is that they're continuing to expand their monetization of WhatsApp, but they're doing so while keeping a really tight control on the resulting WhatsApp consumer experience. And they're doing that by making sure that WhatsApp users are never inundated with messages that are not performing well when delivered to them. And so they're thus making changes which focus on prioritizing engagement and the quality of the messaging, which translates to them not necessarily guaranteeing that any particular marketing message we request them to send actually gets delivered and that they're going to shift to a more dynamic pricing model that will interact with that kind of message guarantee. Now, interestingly, if you just take a step back from that, that direction of travel is actually not dissimilar to the present reality for email. You can send any email you want to any email address, but it doesn't necessarily end up in a user's inbox. And that depends on a variety of factors related to the content of the email and whether other people are engaging with it. And so in many ways, WhatsApp is following in some well-treaded footsteps in order to try to keep noise out of a channel, especially as they want to be able to continue to drive a really great user experience inside of WhatsApp. And I refer to that broadly as an increase in the complexity of the deliverability environment for WhatsApp. And as we've spoken about a lot of other times in the past, anything which provides return sophistication in targeting or content relevance, or anything which requires the management of more complexity in a channel is ultimately good for Braze in the long run because of where we sit in the stack and the sophistication that we can deliver to our customers. Now, getting back to your gross margin question then. For a business model perspective, the pricing changes with WhatsApp messages being more dynamic and not having guaranteed delivery will likely shift the way that we monetize that channel. We're still working through the details of that, but to give you a bit of flavor, we expect that we're ultimately going to land in a setup where more of the message cost flows directly through Meta and then Braze operates higher up the value stack, which means smaller dollar values for WhatsApp on any individual Braze order form, but a higher gross margin percent, and likely an easier way to sustainably grow the channel, especially as Meta levels the playing field for the underlying message costs across their early partners, as they've been experimenting with this program in the early days. And so that's going to take new R&D investment, some changes to our GTM motion. But WhatsApp is actually just a low single-digit percentage of our revenue today, and while it's growing fast, its present revenue is not material to the overall revenue numbers in the overall business. So I think we have plenty of flexibility to navigate these changes without material disruption. And we also think on the upside, in addition to the velocity that I referenced earlier and just leveling the playing field and making this an easier channel to scalably sell, we also think it may unlock some new budgets in the performance marketing space and open up some new options for channel expansion. So I can't speculate about the details of where that goes from a product perspective, and we obviously don't know enough at this point to quantify the impacts of these things. But I hope that that gives you some color on all the different directions of travel for the different aspects of that channel because it will be important in our future.

Appreciate the color. Thank you.

Our next question comes from Arjun Bhatia with William Blair. Please unmute your line and ask your question.

Thank you. Thanks for taking the questions. Bill may be the first one for you. Just as we're thinking about the macroeconomic backdrop, the tougher selling conditions, how are you seeing the kind of rate of deals that are coming into the pipeline? Because for customers that are thinking of re-platforming at this time, it seems like a unique time to do it when there is uncertainty. And they're also dealing with those generative AI technological shift that's taking place. So do you see that in the pipeline, or is that actually helping you in this moment, convert more customers over?

Yes. So I think that the qualitative challenges that I mentioned earlier in the call of more deal scrutiny, longer evaluation cycles, and simply teams having less resources available to be ambitious in general, those are all present. And they're actually present across both the SMB and the enterprise categories. But I think that the big thing that we started alluding to about a year ago, and I think that continues to be the case, is that a lot of the big risks to the downside are relatively more controlled than they were a year ago and certainly more than two years ago. And that's both giving us the conviction to continue investing and go to market expansion, as you've seen. But it's also, as you alluded to, leading to a lot of RFPs that are coming in. There's a lot of people taking advantage of this time of relative quiet to be able to reevaluate what the kind of messy architectures that many of them developed during the breakneck growth pace of the late teens and into 2020 and into 2021. And we're certainly benefiting from this being a time of reflection and being able to go back. It's like you talk about scrutinizing a budget and scrutinizing architecture, of course, the outcome of scrutiny has often changed, and that change leads to RFPs. And that is certainly a good thing for us. That is against the backdrop of a macro that is, of course, more challenged, like as they go through that change they're not doing so with bigger budgets, they're not doing so with bigger teams. And there are still places where people and businesses are shrinking instead of even having stabilized. And so I think when you net it out across the entire environment, you still see these qualitative challenges. You still see a difficult macro. But I do think that those mechanisms that are within that, which include scrutiny leading to change, leading to RFPs, leading to opportunities to unseat legacy architectures, we actually just had a legacy takeaway recently that I think had been on one of the legacy marketing clouds for over 14 years when we just did the takeaway. And so seeing opportunities like that showing up in the broader environment right now is obviously a really good sign for us.

Okay, appreciate that. And then for the second question, just -- you talked a lot about, I think, international investments in your prepared remarks. It sounds like you're expanding your data center footprint, maybe some go-to-market investments there as well. But with all the kind of incremental investment in international, how should we think about kind of the growth opportunity there? And as you think about the balance of this year and maybe even next year, what's the potential of growth acceleration in international markets as we just think about performance over the coming years?

Yes. So first of all, I think that the primary thesis behind this is that the trend toward globalization and the trends that I referenced above are not going anywhere. It's also a great time to be hiring new talent, and we're excited about being able to build foundations for future growth. But we're not in hyper-growth mode in any of these places. And we're making sure that we have a multitude of foundations in place so that we have optionality. And so there's a few different major goals that we have. One is that we want to better serve our existing customers, and their operations and customer bases are increasingly globalized, and we want to be able to be there to support them. Whether that means data centers, it means regional teams that are maybe non-English speaking, or it means literally having go-to-market resources, or our community or training available and enablement available in these different regions and countries and languages. The second thing is we want to be learning more about these markets to ensure that our product and our partnership portfolio and the operational footprint like our data centers, are well suited to grow into them more meaningfully into the future. And then thinking about next year an expansion of capacity, we want to both provide more overall room for us to accelerate scaling when the macro does start to improve. And we want to have the optionality and diversification in the likely case that the global recovery is uneven. And so if we start to see signs of strength in one part of the world earlier than the other, we want to make sure that we have the right foundations in place to be able to deploy that new sales capacity or those new marketing dollars in those places do so quickly and efficiently. But I think it's too early to say exactly where meaningful recovery from the current macro will happen, first on exactly what timeline it will happen, to what extent the capacity will be there. And so I think what you're seeing from us is a strong conviction in the long-term trends, a strong increase in the amount of globalization being demanded of global partners like Braze, particularly in the enterprise, as they continue to grow their first party investments, both in data and in building up new audiences with new products and services. And we want to be able to meet that evolving customer demand where it is and already be there where it's going to be. But we're obviously doing so against a backdrop of improving profitability, continuing to work toward our goals of sales and marketing efficiency. In many cases, starting a new and building a new foundation is less efficient than putting an incremental dollar in a place that's already mature and already working really well. But I think that we're in a position where we're early enough in our market, we have the balance sheet to do so. And we have conviction in the future opportunity to make sure that we aren't short-changing the building out of foundations for future growth, even while we navigate this difficult macro and do so with an eye toward increasing profitability.

All right, perfect. Very helpful. Thank you. And congrats on a nice quarter again.

Our next question comes from Scott Berg with Needham & Co. Please unmute your line and ask your question.

Hi, everyone. Nice quarter here. Bill, I want to start off with a theme that we wrote about a couple months ago coming off the annual CAP Talk conference. Primary theme of that show was talking about personalization's and how the kind of the fever around these AI trends last year, year and a half is kind of benefiting how these brands and companies want to go to market because they want to personalize marketing message or e-commerce sites more. Do you see that trend helping you right now? Because your numbers certainly kind of buck the trend that we've seen from other April quarter reports last couple of weeks where AI seems to be pushing or delaying their opportunities. It almost seems like some of this AI interest is helping you because that's effectively what your product does, you personalize emails.

Yes. And I would actually maybe use one part of our product to explain the general trend that we're seeing here. And that would be our AI item recommendations, which I spoke about in last quarter's earnings call. And this is a really interesting example where what it is effectively being able to take a catalog, whether that's a catalog of music or a catalog of travel destinations, or all of the items in your Shopify store, and be able to provide better and more personalized and higher performing recommendations when you have an opportunity to communicate with someone, whether that's an email or maybe it's in a carousel, when someone hits your website or comes into your mobile app and goes in their inbox, et cetera. Obviously, the versatility of Braze's channel set lets you inject recommendations like that into all different parts of the customer journey. But one of the reasons we didn't build that 10 years ago, and that we actually waited to build it until more recently, is because the state of the art in recommendation capabilities required a very bespoke approach. Now, when I just walk through catalogs, I use the term catalog very generically to mean things from music to movies, to experiences to products, and having massive product catalogs and being able to navigate a whole bunch of nuance in that. And it's actually really incredible that the new AI item recommendations that Braze built using transformers works across all of those different domain areas. Because if you took an approach for item recommendation from five years ago, state of the art, it would really need to be specifically trained and tweaked and constantly babysat in order to work in a very bespoke domain area. And then if you tried to apply it to another vertical or another category, it just wouldn't travel very well. And so that means that we, because of the advance of the state of the art, have the ability to solve this in a more generalizable way, and therefore can build it into Braze and sell it to customers and get up and running with it quickly. But it's also a bellwether for the fact that a lot of these capabilities are finally working, they're finally delivering on their promise. And so if you go out five or six years ago, everyone talked about the importance of personalization, but the vast majority of CMOs were still pretty skeptical that they would be able to successfully implement and deploy something that could do content recommendation on the order of what your Spotify Discover playlist is capable of in terms of introducing you to new music that is really going to resonate from a massive product catalog or kind of pick your personalization challenge. And so what you're seeing right now from buyers is that I think that the lingering skepticism that they, as an organization, regardless of where they are in their technical sophistication or what their product domain is, can quickly and easily take advantage of these new capabilities. And then, of course, Braze's new product development is right there to hand that to them. And going back to the Snowflake question that we started this call with, actually one of the challenges before being able to run a product recommendation system was getting access to the data. As product catalogs change, as inventory changes, as price changes, and all these other properties, a recommendation system needs to keep pace with all of that change. But that is now also very easy to do as well because we can seamlessly sync catalog information directly from a customer's Snowflake cluster, as an example, into the Braze item recommender system. And then our models are able to run on top of that real time, easily updated data in a way that's low total cost of ownership for the customer and is driving really good results. So it's a great story where everything really is coming together to deliver on the promise that everyone's been talking about for a long time. And I think that is certainly leading to positive momentum for us.

Super helpful. Thank you, Bill. And then, Isabelle, just from a follow-up perspective, can you talk about linearity in the quarter? Your subscription revenue growth rate accelerated, not just quarter over quarter, but was higher this quarter than both the last two, even after the revenue reserve release. Just to know if there's something unique in the quarter to kind of drive that outside of just good bookings. Thank you.

Yes, no, there's nothing particularly unique. I mean, NorthStar added the $3.5 million to the quarter. We had improved linearity last year relative to the prior year. So that was a tailwind that we saw last year. This year, actually, we're seeing kind of similar levels of linearity versus where we were last year. So we're very pleased to be kind of back to these more normalized linearity levels, but not currently, certainly in our guide, not forecasting any kind of further revenue acceleration associated with that. Otherwise, nothing particularly unique in the quarter. So just expect -- the quarter performed as expected from our perspective, even with the revenue reserve that we had to take.

Very helpful. Thanks again. Congrats.

Our next question comes from Hannah Rudoff with Piper Sandler. Please unmute your line and ask your question.

Thank you. This is Brent Bracelin on for Hannah here. Bill, I wanted to go back to the strong start here. It is a little different from what we're hearing from your large competitors. And just trying to double-click into what you're seeing. Is there any sort of change? Because it does feel like enterprise software demands are very mixed. So are you seeing existing customers starting to lean a little more into Braze? Is this a function of your go to market effort starting to drive a little more new customer activity? Walk us through why you think Q1 is off to a pretty healthy start here. And what drove that?

I think execution is a really big part of it. When we're talking about these macro challenges, it is still a very challenging macro. But Braze has over the last five or six quarters, as we've been experiencing this really difficult macro, really been buckling down, making meaningful internal changes, making big investments in our go-to-market enablement and our partnership ecosystem, in our event footprint, in our community building. We launched a new brand earlier this year. We've done some of our first meaningful out-of-home campaigns to be able to help build awareness in that brand. We've hosted events and brought thousands of people through Braze events around the world in Q1, and we continued that momentum into Q2. We -- the investments that we've made in enabling our sales team have been really effective and we've seen great improvements in productivity there. And so, just a lot of things to be proud of from an internal execution standpoint, but it is still really hard out there. And, one of the other things that I would say is that we haven't seen momentum really sustaining itself in any category of the market that we see. So whether you're looking at it from a geo perspective across America, Europe, Asia, if you're looking at enterprise versus SMB, and I'll remind everyone that for us, SMB is not the long tail of SMB, since we still have that price floor and annual -- that price floor in the 20,000 and an annual contract requirement. But from that floor all the way up into the enterprise, over the last four quarters, we've seen bright spots throughout that stack and we've seen bright spots throughout the world or across certain verticals. But none of them have managed to really sustain themselves for more than a couple quarters at a time. And so I think that what you're seeing in Braze's business and in our consistency is the benefit of the diversification that we have around the world and across use cases and across verticals and across company sizes. But you're also seeing that the macro is not really enabling anyone to make a big consistent bet on any part of the market and expect that bet to return really well for two or three sustained quarters, even, because it is still difficult across the board. And we're finding these great pockets of opportunity which are available to us because of our diversification, but we haven't been able to see anything really sustain itself and start to build momentum toward a really positive market condition, nor have we seen those pockets of optimism really sustain themselves for more than a quarter or two.

Helpful color there. And then, Isabelle, as you think about this kind of new normal environment you've been executing through here the last five, six quarters, you did talk about leaning into go-to-market, adding additional sales capacity to try to better position the company next year for growth. But it looks like Q1 came in a little better from an operating efficiency standpoint. Did you spread out or pause the hiring there? Or walk through what drove some of the improvement efficiencies there in the quarter versus the plan to hire?

Yes. So, I think we have started to bring back hiring -- our hiring capacity. Over the course of the prior year, you'll remember we did put that headcount pause on and you can see actually in the statistics our headcount growth was pretty anemic. We are now starting to ramp that back up and so we are bringing more capacity online. I would say there are -- as we enter some of these new markets, there are just -- there's timing considerations as people give notice and how long it actually takes to sort of from signature to start date. So we're seeing some of that at play as we enter some of these new markets. And I think there are just other efficiencies that we were able to capitalize on, whether it was across T&E or in our core tech stack. And there are plenty of places where we are forcefully trying to be as efficient as possible. I think I mentioned last quarter that in my FP&A team, I was working on being a little bit quicker twitch. And that quicker twitch is going to enable us to make, to pull in the reins where necessary, and then also be able to take capital that's been saved in certain areas and redeploy it in higher ROI ways. And so I think what you're seeing is some of the benefits of some of that quicker twitch motion that we experienced in Q1.

Helpful color. Thank you.

Our next question comes from Brian Schwartz at Oppenheimer. Please unmute your line and ask your question.

Thank you for taking my questions this afternoon. Bill on the topic of AI, you get good color on how it's impacting productivity and resources and personalization. I wanted to ask you about deal cycles. Is it your sense, whether it's new logos or your customer spending, is AI helping or elongating deal cycles?

I don't think I'd be able to discern a material impact. It's definitely involved in every deal cycle. It's obviously in every RFP. We present our AI roadmap vision in basically every deal cycle. And I think one of the most important parts for a buyer right now is that, well, I think that there's an understanding that the tangible use of AI, generative-AI, et cetera, especially the newer capabilities that are being driven by agents and LLMs and such, is still in its early days. But they want to make sure that if they're going to make a platform shift, especially one that is part of the consolidation cycle and part of the enterprise replacement cycle that they're betting on a horse that is going to have a frontier leading vision that has the right ingredients in place in order to be a winner in AI and to be able to deliver those new capabilities to them quickly and comprehensively. And so -- we have a fire alarm, that just came on here in a second that I'll try to talk through. And so, I don't think that those are necessarily leading to a strong difference in deal cycles, but it's absolutely an important part of every single one of them.

The follow-up question I had, it's either for Bill or Isabelle. Braze is a horizontal business. So just wanted to ask you about the industries, if any industry surprised you in terms of strength or weakness in the quarter? Thanks again for taking my questions.

Yes, so I think across our -- and I think Bill mentioned, one of the strengths of the organization is the diversity, the diversity in geographic region, the diversity in our customer size and classification, the diversity in the industry. And we saw this a little bit in COVID, and I think this kind of continues. There are industries that were doing sort of gangbusters during kind of the COVID times and then industries that sort of came back post COVID. We're continuing to see sort of that diversity. I don't know that there's any particular trends that are persistent, I think, as Bill previously mentioned, but I think that diversity specifically across so many different dimensions, is what does help us with a certain level of resilience across these different conditions.

Our next question comes from Michael Berg with Wells Fargo. [Operator Instructions] Michael, you may now unmute your line and ask your question.

Hi, thanks for taking my question here. I want to ask one on the macro and the budgets, but slightly different way here. So, like others have alluded to, you guys performed relatively well to others in broader software. And I'm just curious if you believe or are seeing in your conversations that Martech investments are seeing a higher relative priority to other areas of the software, or maybe some of the other soft secular trends are driving that anything to point to there?

Yes, I would say I don't have great visibility into exactly how the spend is being prioritized in the stack, other than to say that we continue to believe that, in particular, the part of the marketing software spend that Braze represents, that we are amongst the highest value propositions that a customer has, specifically because of the ability to invest in improved retention and enhancing the long term value of already acquired relationships and generally improving the unit economics of any business that really focuses on customer engagement. And so in a time like this, we think it's the exact right investment for brands to be increasing, even as they may be lowering discretionary marketing spend at other places. I would also say that, we talk a lot about the secular trends that are driving a lot of Braze's opportunity around investment in first party data, in the building of first party relationships, in re-tooling product and service ecosystems, in order to enable a greater level of more persistent connection with the customer. By that, I would call out examples like any of the quick service restaurant chains with their mobile wallets and ordering and loyalty. Automotive, in places where you go from never interacting with the automobile manufacturer to using a mobile app to unlock and start your car every single day. Al right, I can kind of go around a lot of industries and verticals and provide you examples of these investments that are being made by these companies to deepen their connection with their existing customers, to be able to understand that connection better and then be able to communicate with them. And so I think that is a secular trend that's not just being driven by short term machinations in the overall budgets and budget stack, but is actually an imperative for businesses to remain competitive as we continue to digitize more of the world and as customer experience continues to get put at the center of what drives brand loyalty and brand connection. And ultimately, that connection is where businesses are going to find their profitable way out of this current macro environment.

Our next question comes from Brian Peterson at Raymond James. Please unmute your line and ask your question.

Well, hi, guys, thanks for taking the question. So, Bill, just wanted to get a quick update on the partner channel. How's that ramping in terms of capacity? Any thoughts on the potential contribution to bookings this year? Thanks, guys.

Hi, yes, thanks for asking for an update on that. I would say that the status is roughly the same as it was last quarter. Leading indicators are all good. Accenture and Deloitte have dramatically increased the level of resources and focus, in particular over the last couple of quarters. We've also been talking about WPP quite a bit for the last year. And I would say that the level of investment and partnership and coordination that we have with them has been really fantastic. And so, we've been working with all three of them on better levels of coordination, on deal cycles, on new opportunities, and we continue to be excited by the momentum there. But I think against that backdrop of the difficult macro you're seeing, that macro hit those particular sectors as well. And so the overall levels of activity that we see there are not -- you shouldn't underwrite that to anything in particular. But qualitatively, we've been really happy with the progress.

Our next question comes from Pinjalim Bora at JPMorgan. Please unmute your line and ask your question.

Oh, great. Thanks for squeezing me in. And congrats on the quarter. Just a quick one, maybe talk about the pipeline and the demand trends that you're seeing so far in Q2. Is there a change versus how you exited Q1 at this point? Thanks.

Yes, so we started the year a little bit light on the late-stage pipeline after a really strong Q4 that was focused on closing. But we've been off to a great start so far this year. I just mentioned a bunch of the things that have been happening this year for new pipeline development. Things like a rebrand that launched right at the beginning of the calendar year, big investments in awareness, and a strong global events program that's activated thousands of customers and prospects around the world. And I think that pipeline opportunity is certainly available out there. It's harder to find than it would have been in the COVID era, but because of the diversification of the business, we have a lot more places to go and hunt for opportunities. Braze's versatility across verticals, across company sizes, across use cases, all over the world. You hear me talk about this a lot, but it's really a fantastic property of what we've built here at Braze, that it's able to so versatile deploy itself and be used by different organizations. And that means that our go-to-market teams are able to continue to operate a very diversified portfolio of potential opportunities and go find pipelines wherever it is available.

Thank you.

Our next question comes from Tyler Radke at Citi. Please unmute your line and ask your question.

Great. Thanks for taking the question. I want to direct this at Isabelle. So last quarter we talked about the progression of gross margins throughout the year. It was nice to see gross margins come in a little bit better than we expected in Q1. Can you just talk about the gross margin side for the rest of the year, especially given some of the changes that Bill alluded to on the WhatsApp channel? Are you still expecting them to sequentially increase each quarter? What are you contemplating in terms of how those WhatsApp contracts ramp and the structure from a cost side perspective? Thank you.

Yes, so thanks for the question. So I will go back to the comments that I made last quarter and just reiterate. So we are happy with where things came in, from, a gross margin perspective in Q1, expect to see improvement over the coming quarters, for that metric. I would say that the comments that Bill made with respect to WhatsApp, I think that is -- that's going to have a little bit more of a longer term. It's going to take a little bit more time for that to really play out. I think with some of the comments that he made were that -- we don't really know exactly how all of this is going to shake out, and it's going to take time for that to sort of work its way through how our go-to-market motion evolves there. Also, I'll reiterate, currently the dollar value of WhatsApp, it remains very small as a proportion of our total. And so while it has had sort of some of the utilization of WhatsApp that was fairly concentrated over the last couple of months was what sort of drove some of that pressure that we saw in Q1. Some of that has sort of been relieved at this point, which is that and some very concerted efforts to work on core spend generally is what is going to drive the increases in gross margin over the balance of this year. But it's a little early to give specific margin commentary. The only thing I would say is for now, we remain comfortable with the long term guided range of 67% to 72%.

Thank you.

Our Q&A has come to an end.

All right. Well, we're sorry we couldn't get to everyone due to time, but we'll be talking to you all soon in callbacks. And thank you to everybody for attending the earnings call today. I hope you found it informative. And we continue to reiterate that we're super excited about the future opportunity for Braze. And we thank you for being investors. See you next quarter.