Braze, Inc. (NASDAQ:BRZE) Q3 2023 Earnings Call Transcript

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

Taylor McGinnis: 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.

Isabelle Winkles: 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.

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

Brian Schwartz: 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?

Bill Magnuson: 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.

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