David Hynes: I’ll echo others’ comments on the quarter. It was nice to see the sequential growth in cRPO. Isabelle, the last time we spoke, I think the message from you was kind of like signs of stability are forming in the business. Like to that end, can you talk at all about linearity of bookings in the quarter? Any observations on kind of intra-quarter NRR? Any of that sort of stuff would be interesting to hear.
Isabelle Winkles: Yes. So I think we’re really pleased with the execution that we had this quarter. And linearity actually — I think one quarter does not a pattern make, but we were very pleased with our linearity results. And in fact, if you look at sort of some of the over attainment that we had relative to kind of the consensus number that was out there, linearity played a non-negligible part of that. I — we are not including that type of expectation going forward for purposes of guidance. So I definitely expect that the over-performance that you’re seeing here, this is not a pattern that we would expect to repeat. But it was very pleasing to us to see the linearity that we did achieve in this quarter. We’re kind of back to the pattern of — in this quarter, back to the pattern of about 50% of our bookings occurring in the first 2 months of quarter, which is great versus some of the back-end that we had been experiencing over the past several quarters.
David Hynes: And then a quick follow-up for you. Is that WhatsApp channel kind of gets in the market and continues to scale? Any comments you make around kind of contribution margin of that channel, like does it look more like SMS, does it look more like higher-margin channels? How should we think about things?
Isabelle Winkles: Yes. So we don’t speak specifically to that. I’ll just sort of — and I think we’ve made comments around this just sort of in terms of like where it lives in the sequence, it’s going to be somewhere between e-mail and SMS. So think of it as kind of there in the pecking order, but that’s what I’ll say. I’m not — certainly not concerned. In fact, even as SMS was growing as a proportion of our total top line, which it’s done very steadily over the last 3.5, 4 years. We’ve continued to find ways to expand our margin, and you’ve seen that fairly meaningfully. So I would not look at the incorporation or growth of WhatsApp as — with any concern towards gross margin compression.
Operator: Our next question comes from Derrick Wood with Cowen.
James Wood: Congrats on a solid quarter. Following on that same topic, just curious, Bill, or Isabelle, what you’re seeing in terms of cross-sell activity across channels including e-mail, SMS, in-app WhatsApp. Just wondering how side to push where you’re seeing the most traction and whether there’s any change in what channels you’re landing with for new customers.
Bill Magnuson: Yes. So I’ll call it two things. One is that we’ve been really excited to see that as we’ve added new channels and as we’ve grown the sophistication of those channels, even some that have been in the product for 10 years, like e-mail, that we continue to find the ability to start new contracts across any subset of channels. So we have customers that are starting with just SMS, with just content cards, with just e-mail, Obviously, just mobile, which is a big part of our heritage. And so as we continue to build out these new channels, we’re looking for them to both, provide upsell and cross-sell opportunities. But also a new way to introduce people into the Braze ecosystem. And our goal with all of these and this comes under that umbrella of start anywhere, go everywhere that we’ve been talking about for a while is that when we get a customer into Braze on any given channel, we introduced them to Canvas.
And they also set up a data flow that flows through every layer of our stack. And once they do that, it’s incrementally very easy for them to then expand across to other channels. The feature sets that they use for targeting and for personalization, the concepts that exist around reporting are all the same. In many cases, the data flow can be augmented, and I spoke earlier about how things like cloud data ingestion and a lot of our partnerships across the broader data ecosystem make it easy for new use cases or new channels to have the data that backs them, supplementarily come in and get set up quickly. And so we’ve got the right mechanisms, both to have customers start in a flexible array of places as well as have them continue to expand across new channels.
I’d say that the thing that’s most exciting though is the sheer number of customers that we see go from 4 to 5 to 6 to 7 to 8 to 9 channels. I was visiting a customer in Australia earlier this year, who proudly told me that they were in 11 different Braze channels, and they had made it like an internal mission to make sure that they continue to adopt all of them. And when we look at the adoption of WhatsApp in the quarter, there were certainly some of the customers that came in there were brand new, but there were other places where a customer was adding and it’s their fifth, sixth or seventh channel. And I think that when you look out across the legacy marketing cloud landscape and if you look out across our — the other start-up competitors that we have, you’re just not going to see examples of that.
And it goes back to a lot of the points I was making about architecture earlier, which is that unless you’re laser-focused on controlling complexity through the entire lifetime of your existence and unless your R&D process is continuously focused on upgrading your foundations and maintaining tech debt and making sure that you’re doing a lot of user experience research, that you’re going back revamping the UI/UX of all of these different products as you introduce new channels, so that the complexity stays under control. You just are not capable of being able to have your customers expand so fluidly and across so many different channels as we see with Braze. I talk a lot here about how if we’re talking about channels, we’re actually missing the point.
The idea is that if we can get people into orchestration and into sophisticated data-driven strategies that are focused on what the customer cares about and what the brand cares about and how you marry those together and have them self reinforce each other through sophisticated customer engagement that the channels are more of an implementation detail. And you’re not achieving that unless your customers are able to spread across them. And so we really carry that as a goal, both with our product development as well as how we help our customers through integration and onboarding, and through the post sales process as they add new channels over their years of being a Braze customer. And we’ll continue to measure ourselves by that yardstick to be able to say, “Hey, it should be just as easy for a customer to adopt their eighth channel as it is for them to adopt their first two.” And as long as we can keep accomplishing that, we think that our ability to invest in net new channels or to deepen the capabilities of existing channels and have our customers take advantage of those to both, drive more revenue to Braze through cross-sell and upsell but also to enhance our own ROI will continue to be a really vibrant growth path for us.
James Wood: Great. Maybe one for Isabelle. Just on the guidance. I mean, going into Q2, you had guided for 7% sequential growth. You ended up with 13%, very strong quarter. Going into Q3, you’re guiding for 2% growth. It sounds like maybe that upside in Q2 was linearity, and you’re not assuming that in Q3. But anything else to call out in terms of potential maybe some pull forward, or how to think about some extra seasonality around the Q3?
Isabelle Winkles: Yes. Thanks for the question. I think one other thing to call out, so the linearity is certainly at play, and we did have a very strong execution quarter. I think one quarter does not a pattern make. So the combination of the strong execution with the linearity. Those two things combined drove some higher-than-anticipated results, which I wouldn’t necessarily expect to repeat and are not embedded in the guide in the back half of the year. The other item is, you’ll remember in my comments that North Star was in terms of the guide, we had embedded about $1 million. And we had an extremely successful on-time integration right at the beginning of June for that had very limited surprises to the downside, and they contributed almost $2 million instead of that $1 million.
