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

Thank you, Operator. Good afternoon. And thank you for joining us today to review braces results for the fiscal fourth-quarter 2022. I hope you enjoyed today's hold music, which was composed, performed, and provided by Frankie Saxena, a solutions consultant and braces London office. Thank you for the wonderful music Frankie, I'm joined by our Co-Founder and Chief Executive Officer, Bill Magnuson, and our Chief Financial Officer Elizabeth Winkles. We announced our results in a press release issued after the market closed today. Please refer to our Investor Relations website at investors.braze.com for more information, and a supplemental presentation related 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 first quarter and full fiscal year at a January 31, 2023. Our plans product and feature development, our plans social impact initiatives, our planned investments to maintain our improve our overall unit economics, including ASP,customer payback period, and overall average revenue per customer and our long-term target operating margin. 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. 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 fourth quarter 2022 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 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 U.S. GAAP. And now I'd like to turn the call over to Bill.

Thank you, Chris, and good afternoon, everyone. Before I dive into our results today, let me take a moment to acknowledge the global situation. Our thoughts are with the people of Ukraine, who have found themselves forced to fight for the fundamental right to live in peace. When it became apparent that a conflict might begin, we analyzed our data to quickly identify affected customers, enabling our customer success team to proactively offer support and arming our security teams to protect against potential cyber threats. Our direct business exposure in Russia and Ukraine is very limited and we currently suspended all new business activity in Russia. We will continue diligent case-by-case assessments as our customers situations evolve. While we have no employees in the region, we have tried to do our part by donating to humanitarian relief efforts, increasing our employee donation match, and extending support to employees who are personally affected by the conflict. And now, let me turn to the quarter. We're very pleased with our fourth quarter performance, which again demonstrated our ability to deliver high growth at scale. We achieved high watermarks for new bookings, renewals, and net retention in the quarter. We generated $70.4 million of revenue, up 64% compared to the same period last year, and 10% compared to the third quarter. We're proud of the strength of our customer relationships as dollar-based net retention grows to a new high watermark of 128%, reflecting strong renewals and upsells. For customers with $500,000 or more in ARR, dollar-based net retention was 136%, up 300 basis points year-over-year, demonstrating our ability to land and expand with large enterprises across diverse industry verticals globally. This quarter, we also secured our largest single customer land to date and annual contract value of over $3 million with a European-based…

Thank you, Bill. And thank you, everyone for joining us today. We reported a strong fourth-quarter, and as Bill mentioned, fourth-quarter revenue rose 64% year-over-year to $70.4 million. This was driven by a combination of customer expansion, new business sales, and strength in our renewals are. subscription revenue remains the primary component of our total top-line, contributing nearly 94% of our fourth-quarter revenue. The remaining 6% represents the combination of onetime configuration and on-boarding fees, as well as other professional services that are subject to similar annual contract term as our subscription-based revenues. Customer momentum during the fourth quarter was strong, with total customer count increasing 54% year-over-year to 1375 customers as of January 31. This represents an increase in customer account of nearly 500 over the last four quarters, and 128 during Q4. Our total number of large customers, which we define as those with ARR of $500, 000 or more grew 51% year-over-year to a 107. And as of January 31, they contributed 52% to our total AAR. This compares to a 50% contribution as of the end of FY2021. Customers with AAR of more than $1 million grew 58% year-over-year to 49. And as of January 31, they contributed 38% to our total AAR which compares to 33% as of the year ago. As Bill mentioned, we recorded our single largest customer land in Q4 at over $3 million. And Q4 was a high watermark for total bookings, renewal rate, and retention rate. Our renewal rate combined with our strong upsells, drove the increase to our dollar-based net retention rate as we continue to execute on our effective land and expand motion. For the whole company dollar-based net retention rose to a 128% up over 500 basis points compared to the prior year and up over 200…

Certainly, [Operator Instructions]. As a reminder if you are using a speaker phone, please remember to pick up your handset before asking your question. The first question is from the line of Mark Murphy with JP Morgan. You may proceed.

Hey, thank you. This is Pinjalim for Mark. Thank you for taking our questions. Congrats on the strong quarter. I want to ask you just high level, what is driving the strength overall? If you think about it, your billings growth is -- seems really strong on top of a very tough comp. I mean, is it the IPO kind of putting a spotlight on Braze, is this just awareness of the category or is this kind of tail wind from the first-party data that you guys have versus depending on cookies for others, maybe? Can you help us understand what's at a high level driving the strength of the business?

First. Thanks for that complement in the quarter, we're obviously very pleased with the execution from the team and the response from our customer base. I think that when we analyze the tailwinds behind the business, it's really important to keep in mind that we are benefiting from multiple dimensions of generational trends that have been changing in the direction of what we've been building for over a decade now. When we look at it from the perspective of digitization trends that move to first-party data, the move--the continued enhancement and sophistication within customers as they move to more interdisciplinary strategies and customer engagement. We continue to see more and more companies out there that are structuring their teams in ways that they can really take advantage of Braze as approach to customer engagement. [Indiscernible] And we continue to execute at a very high level. And we, as we look further into the future, we're continuing to invest for that growth and we're continuing to execute at that same high level as our customer base continues to grow and [Indiscernible] and a lot of these trends that you just highlighted continue to grow as well.

Yes. Understood. Okay, and is about just a follow-up? Anyway, to unpack kind of metric tension, the dollar-based net retention strength. I think you've said renewals was strong as human. You're talking about gross dollar retention. Did that uptick and within expansions, is there any one or two major drivers that you're seeing jumping out?

So it's a couple of things, so certainly, yes on the renewal front, that's definitely, we had a new high-watermark of gross renewals in the quarter. So that's fantastic. Another factor that we're seeing is the quarter -- the in-quarter specific net retention rate was very strong. But also we're seeing some tailwinds from the fact that we are calculating the 12-month trailing statistic, and we are legging out of some weaker quarters from a few quarters ago. You're seeing a combination of both things. But in-quarter results we're in and up themselves very strong.

Got it. Thank you.

Thank you, Mr. Murphy. The next question is from the line of Ryan MacWilliams with Barclays, you may proceed.

Thanks for the questions.

[Indiscernible] Braze vertically integrate that responsibility, allowing for the marketing teams that utilize us to be able to get access to more data in order to drive deeper personalization, more sophisticated orchestration through our Canvas visual programming language, as well as [Indiscernible] feature set. So we continue to invest heavily across the data ecosystem. The exact right mix of products that is appropriate for given customer and their own kind of data footprint will continue to evolve and we think that's going to be a heterogeneous landscape. But what has always been really important to Braze, given where we sit in the value chain with respect to engagement, owning the relationship with the customer, being integrated into those first-party interfaces and being in the user experience and [Indiscernible] feel of the product and all the in-product messaging is that we need to continue to be instantaneously so that we can power those interactive cross-channel use cases. And that's going to require us to continue to invest in our vertical integration [Indiscernible] the CDP is for certain types of data use cases.

Excellent. I'll definitely get them that offer maybe some time offline. And then for Isabelle, just looking at your fourth-quarter revenue, anything to call out there from a seasonality or maybe COVID impacted standpoint. And how should we think about this quarter as the first guidance? As maybe a landmark for Braze going forward. Thanks.

We're definitely really pleased with where the quarter came in. I think seasonally, it's going to go back to actually how our ACB plays out, our bookings plays out throughout the year. Edge up in Q2, Q3, and then by the time we hit Q4, that's the single largest quarter and we'll do about a third of our bookings in Q4. So the way that plays is into the evolution of revenue is from a sequential perspective, you'll get the strongest sequential revenue growth in Q2 and Q3. And then the smallest sequential growth will tend to be in Q4 and then Q1. I believe that's a little bit of what you're seeing is that fact pattern around the ACB. The ACB was over a month. We typically book most of it in the first two months of the quarter. Percent of our ACB in the third month of the quarter. And so when you're looking at the sequential revenue growth between those two quarters, there's also that fact pattern of how the ACB distributed the revenue results in this quarter.

Thank you Mr. MacWilliams. The next question is from the line of Gabriela Borges with Goldman Sachs. You may proceed.

Good afternoon and thanks for taking my question. [Indiscernible] on the commentary on appropriately risk adjustments in the guidance, how do you think about the potential risk of the macro slowdown leading to less investment in marketing software? And how sensitive do you think your business might be to pull back and market it to Europe. And if there are any indicators of the slowdown in marketing software spending.

So a few things there, and I've spoken about this before, but we think that within the broader marketing landscape in the marketing, both spend as well as from the perspective of focus and prioritization within organizations, that we expose [Indiscernible] focus of Braze causes us to actually have a large comparative benefit in times where there is either a slowdown or there's increased scrutiny on profitability, I think both of which are being experienced in the market right now. When we look at the history where we've seen individual clients that have maybe experienced certain slowdowns or we see three different things that actually really benefit us, where not only are we sticky, but we've grown in prominence within those organizations. The first one is that, in many cases that leads to more expensive R&D resources either being cut or refocused as they're not growing as quickly. In those cases, the flexibility that Braze provides without the need of a direct engineering team doing customer implementations becomes even more important for teams that want to continue innovating and deploying new engagement strategy. Often the first place that you go as a marketer, because the incremental costs of communicating with those users is low and conversion is high, meaning that our [Indiscernible] very attractive. That's exactly where Braze is focused. And then Vis -a - vis the overall bucket of marketing spend we have seen ourselves take up actually a large [Indiscernible] And then the third one is that even during the period of decreased demand, the need to maintain healthy conversations and relationships with your customers remains always on [Indiscernible] We saw that even for heavily impacted industries like travel and hospitality, [Indiscernible] strong growth and just strength within the existing customer base as that needs to maintain those [Indiscernible] Relationships remains a priority for all businesses with a long-term focus. With respect to Europe, we don't break out specific regional breakdowns beyond the 60-40 that we have between the United States and the rest of the world. We are -- we highlighted actually the continued expansion in Europe as we continue to grow our office in the DACH region. And then we've just announced our entrants into the French market with the opening of an office in Paris and we're actively hiring for today. We think that we're still so early in the addressable market within that region that even if there is a broader slowdown that our ability to continue to execute against our goals will be unhindered from that perspective as we just continue to execute with our sales team and with the pipeline generation activities that we have in the region.

That's surely a helpful detail. Thank you. As a follow-up through, is on your commentary on the next normal. We understand that a portion of that model is based on pricing by a monthly after [Indiscernible] Maybe talk just about categories like the eCommerce or quick-serve restaurants that's a really nice exploration during COVID. Are you seeing any signs of main inversion or a slowdown in monthly active users in those particular categories?

We don't break out monthly active users by category, so we can't share specifics on that. But what we do see is that there's a number of things that really, I think even out a lot of our growth and our contracts within Braze. First is that monthly active users and the ability to retain them is very high when customers are utilizing Braze and we see that even in kind of broad changes in user behaviors, that that ability to engage with them once a month for them to remain being a monthly active user is something that all of our customers broadly are capable of doing, especially in growing markets. And so our reversions to the mean in terms of overall activity level, would not necessarily imply that there's a reversion to the mean impact in monthly active users. The other is obviously that we're not consumption-based from a messaging standpoint as well. And so the monthly active user concept itself already has some smoothing in it. As we spoke about -- as we IPO’d that does mean that we didn't experience some of the consumption-based tailwinds from things like COVID that you saw on a lot of other businesses. But we think that it leads to a more predictable revenue model, a more predictable growth for us, as well. And we've included a lot of those factors into our models. We also see that the overall trend of continued adoption of mobile devices, of continued digitization of whole industries, of the continued move towards investing in direct-to-consumer relationships and relationship building. Those, we are more heavily indexed to than any particular category, because we're so well diversified across geographies and across categories. And so even if you see general consumer behavior switching from one category to another, as we did during COVID, the overall kind of trend toward digitization, toward the move for modern customer engagement strategies, toward the building across party data assets and first-party relationship assets. All of those, we continue to see the up into the right. And there's really no trend toward me version that we're seeing across that word.

Sounds good. Thank you.

Thank you, Ms. Borges. The next question is from the line of Derrick Wood with Cowen. You may proceed.

Hey, guys. Congrats on a really strong quarter. Bill, you mentioned this $3 million [Indiscernible] land deal. Pretty impressive to see such a large net new win. I'm just curious is landing a seven-figure deal out of the gate is at an anomaly or is that a dynamic that could take greater hold and anything else you can share with respect to how you won this deal and what edged you out over the competition?

So we've seen continued year-over-year improvement in seven-figure land deals over the last several years, I'm not going to put specific numbers to it, but that's definitely a trend that we continue to see happen. There's a few things that drive that. One of them is that our product portfolio continues to grow year-over-year. So as we've added more channels over time, as we've added more comprehensive data integrations than as brands in general, if you go back to the question that I just walked through, are continuing to grow their own direct-to-consumer audiences and start to embrace new customer engagement strategies, that all of those just mean that the overall size of the audiences that we're engaging, the scope of the services that we're providing in the amount of focus and prioritization that customers are putting on it have grown and all of those multiply together to give us the ability to land larger and larger deals within more and more categories. And so I would say I'm very happy with our ability both to land those seven-figure deals, but also with the diversity of geographies and verticals that we actually do land seven-figure deals in all further underscore that you can see that are dollar-based net retention and those customers that are greater than 500K has higher than the rest of the customer base, and in many ways, even when we land with these. Big deals, there's still opportunity to continue to grow the footprint of those within a lot of these organizations, and we will obviously continue to invest in the product, to continue to grow from there. All of those come together, I think creates some really good dynamics for the business. We've been able to take advantage of. Now that being said, we've also invested very heavily on the SMB side of the business over the last year in particular, and we're seeing really good health metrics and improvements in the metrics both around things like in dollar-based net retention and gross retention coming out of that group. So even though we're obviously super happy on the 7-figure side, we're also very happy with the progress that we're seeing on the SMB side in the velocity of that. And you see that in the net new customer adds and the continued growth there. With respect to that specific deal, I would just say that it was a great team effort that really went. Braze has been very focused on making sure that we're able to live in the right part of the value chain so that we can value sell overtime. We're very confident in the ROI that we can provide the businesses, especially at scale. And we've got the testament to be able to deliver from an operations perspective at very large scale. And all those come together to give us the confidence to go out and land deals like that.

That's great color. And I guess as a follow-up on the announcements you made around commerce this week. Please, help us think about how to drive -- how this may drive more revenue opportunity or what the modernization approach is going to be.

Yes, I think that when you look at the overall product investment trends that we're doing a few things and what we're really trying to do is lean into our advantages and ability to control the complexity [Indiscernible] customers can use more and more Braze's products as we continue to grow the portfolio. [Indiscernible] So when you look at the commerce side, there's a lot of improvement in terms of data integration's, making sure that we've got the right data models and reporting capabilities as well as integration into platforms like Shopify that we continue [Indiscernible] quickly so that as they grow with us overtime [Indiscernible] in data insights to their strategies, [Indiscernible] you improve and upgrade and advance [Indiscernible] Allowed for customers to [Indiscernible] Strategy that customers go through. In many cases, multi-touch. When we see our commerce [Indiscernible] to product catalogs and recommendation, there's a lot around recommendation that especially for certain types of retailers, involve things like inventory and margin that they want to optimize for when they're looking at different amount to compare together their first party engagement strategy with what in many cases also involves heavy acquisition strategy that we've been really building for [Indiscernible] and small Commerce customers over time. And we're really excited to continue to invest heavily in that vertical.

Understood. Thanks for the color. Congrats.

Thank you.

Thank you, Mr. Wood. The next question is coming from the line of Arjun Bhatia with William Blair. You may proceed.

All right. Thank you, and my congrats on the quarter. Bill, maybe and actually follow up on that last point on the Commerce investments you made. Obviously very interesting, but I'm curious how you think about the opportunity to verticalize for other industries where you already have a presence like QSRs or media financial services. Is there an opportunity to take this Commerce playbook and apply it to those verticals, or should we think of given the size and growth in that industry?

Abilities and vertical-specific go-to-market resources over time. Both from a post-sales perspective as we start to look at things like our customer success and technical account managers and strategy that's tied to their -- each of the kind of different verticals. And there's a lot of intuitive ways that those verticals act versus each other. When we look at places that are either highly regulated or capital intensive, they've moved a little bit slower. So finance and insurance, or amongst the innovative younger companies in those spaces. We've also had early progress in terms of the more traditional parts of those very, very large industries. And we wholly anticipate the technology adoption curve within verticals like those over time, by making more appointed verticalized estimates, both from a product and a go-to-market standpoint. So you're seeing this in the early days with commerce. There's other categories where I think that the products of Braze is, because of its flexibility and its sophistication can really go through and is built for purpose in those verticals right out of the gate. That doesn't mean that we wouldn't and within the products -- from a product and R&D perspective, there's other places, I mentioned finance and insurance and health and wellness where there are specific more of that addressable market. And that's absolutely going to be part of our strategy over time. I think that we've tackled a very fundamental business problem with Braze, where we're focused on trying to invest in customer relationships over the long term, doing that through communication and understanding our customers, the go-to-market across the specialty. Some of these more specialized verticals that we will need to do more than just solve the generic business problem. We're prepared to do that. It's really just a question of prioritization for us for market and potential out there that when we look at these different ways, business and grow our revenue lines, we're balancing across geographic expansion, product expansion, verticalization, channel expansion, etc. And that's a good problem to have obviously as we try to optimize across all those dimensions, but verticalization [Indiscernible] continued to exercise over the next few years.

Awesome. Yeah, now that's a great problem to have. One more follow-up if I can. Obviously the gross margins have been improving year-over-year. Can you just touch on how much traction you're seeing for some of the in-app messaging features that you rolled out, content cards or surveys etc? And I'm curious, do you see customers adopt these off the bat or should we think of that further down in the maturity curve, further down in the customer journey, after they've done for [Indiscernible] push notifications, email, etc.

New customer deployments are actually pretty diverse. We actually have a lot of customers who will start out with just content cards or start out with just in-app messages. And obviously there are also then customers that start out with only e-mail or only SMS or only push notifications or any collection of them. I think that in many cases, when a brand has really made the decision that they want to start investing in a sophisticated platform like Braze, that we're pretty adapted finding the first opportunity for them to really get up and running. One of the huge benefits of our vertical integration, is that when you start with any of those channels, the data integration is always complete at the end of that. And so the ability for our customer to start in any channel and then incrementally move into the other ones, is pretty easy and straightforward from that point because the vertical integration of the data flow is already complete. And so we've been really happy with the traction that we've had from the in-product messaging types. It's actually a place where we've been able to acquire customers that we probably wouldn't have otherwise been able to do so because we start there, we have a focus there. And then for plenty of other customers that are just looking to replace the legacy ESP right out of the gate, we then can work with them over time and bring them into the end products used cases which are highly differentiated for Braze. So we're really happy with how that motion works for us. And you'll definitely see that in the dollar-based net retention results that we continue to put up, as well as just the diversity of use cases that Braze deployments represent across the market.

Awesome. Thank you very much and congrats, again.

Yeah. Thank you.

Thank you, Mr. Bhatia. The next question is from the line of Brent Bracelin with Piper Sandler, you may proceed.

Good afternoon. Thanks for taking the question. Maybe I'll start with Isabelle and a follow-up for Bill. Isabelle, appreciate the color around the prepayment fees. But as we take a step back, I know there's a bit of a hypersensitivity that investors have just around fully-funded models. You have a very large cash position. Can you talk a little bit about cash burn on a normalized basis going forward? What is the path to more of a breakeven scenario? And as you think about the existing cash you have, does that get you enough leeway to get to a positive free cash flow environment? Thanks.

Yeah. Thanks for the question. So we don't currently have any plan to do any further capital raises. So I think we're comfortable with the level of cash that we have right now. And we have reiterated our plans to achieve our target operating model of 20% operating profitability and cash flow will definitely -- will certainly come a little bit sooner than that. And you can see that even in some of our historical data. I think the way to look at it is not to be sort of focused on any one particular quarter. And I think I've said this in the past, it's really better than we'd be looking at cash flow on sort of a 4-quarter trailing statistic. And there can be anomalies in any given quarter, just given timing of collections of payments from customers, and then payments that we make as you can see from this particular quarter. And so we believe we are extremely well funded at the moment and have no plans to do any further capital raises to fund the business going forward.

That's helpful color there. And then Bill spent the first two days of this week at it Shoptalk. It just seems like direct-to-consumer, increasing personalization is land grab around first party data was kind of all the rage at the event. I guess as we think about the business, three quarters of accelerating subscription growth, how much has IDFA and sees data privacy changes been a catalyst for the business and a catalyst for larger these larger lands and how can that be a potential catalyst for the business kind of going into next year as well? Thanks.

So I think that from our vantage point, we've seen this as a multi-year trend that has been building over at least the last half decade. And I think that the public markets have woken up to it more recently because you're starting to see it impact things like the earnings at Facebook, or at Snap and other places that are more advertising focused. But when we really started Braze in the early days, we looked at the first-party data is just the more respectful way to work on a relationship over the long term. We wanted our customers to have a long-term focus about how they thought about their own customer relationships and the right way to do that was to focus on opted in, consent, mutual respect, having reciprocity. If you're going to give me as a brand the right to buzz your phone no matter where in the world you are, or what you're doing, I better have something important to tell you, and I better be basing on off of data that you wanted to me to know because I was acting as a good listener and not being like a creepy detective, if you will. So those are all trends that we've seen in our space for years now. We're really happy to see that the rest of the world is starting to wake up to that more. When you look at the regulatory scrutiny that's out there, whether the regulations are coming from Apple and Google as they're making changes to their identifiers or other ways that they are advertising networks work, when you look at changes that are happening in the regulatory environment, these all add compliance costs, but they actually refocus people where they should be for the long term, which is on respectful relationship-building, being a good listener and focusing in the long term. So I think that we're certainly happy to see the continued awareness. This has been a drumbeat that we've been both beating and marching to for many years now. And I think that being respectful and meeting a good participant in a relationship is the endgame. You don't evolve from here. And so we're happy that the market is getting to this point and where we continue to realize the benefits from that as we grow into this enormous time that lies in front of us.

Helpful color. Thank you.

Yes.

Thank you, Mr. Bracelin. The next question is from the line of Brian Peterson with Raymond James. Please proceed.

Thanks. So I'll echo my congrats on the strong quarter. So just one from me, I know you guys talked about some international investments that you're making. It was clear on the call today. I'll just be curious, how much of that is a product oriented investment and I guess I'm thinking about data ingestion and things that might take place there. And if we think about the Go-to-market infrastructure that needs to be built there, is that something that you feel like will be done in fiscal year '23 or is that kind of a multiyear investment? Thank you.

When you look at the history of our international expansion, we've actually tended to lags customer demand and customer activity in each region that we've gone to. And the first focus has been really providing more in time-zone, in region post-sales support for customers, and helping activate the communities on those places in order to improve the efficiency of our go-to-market, so that we can take the early wins in a given market really catalyzed that into advocacy and supports within those areas. There's other examples where for instance, our ability to sell to startups in the DACH region remotely was something that was prevalent, not necessarily relatively easy, but certainly easier than selling to more traditional industries. They're going to have a stronger expectation that we're well established in those areas. So I think that what you should expect to see is that as we continue to crack into more and more verticals and move up that adoption curve that I was referencing earlier, to sell into the enterprises in the kind of the majority part of the curve in these regions they will continue to deploy, go-to-market resources in those places. If you look at the history of Braze, I think is a product investment, to be able to sell into new markets is relatively minimal, with some exceptions, we did highlight the localization of our dashboard in Japan into Japanese, our support, the growth of our Tokyo team. And that has been growing really well. Japan is obviously unique market for a variety of reasons, and we wanted to be able to accelerate the investment that we're making there. We're currently evaluating what our next steps for localization are going to be. You're certainly going to continue to see us adding new languages over time. You also see us continuing to add more offices over time. There's other aspects of this for instance, WhatsApp, which is a new message channel that we're working with Meta on deploying in this year. Hopefully depending on what their timelines end up being as they continue to mature that product. But that's particularly important in certain markets where SMS is either less adopted or more cost prohibitive to be able to use for the types of engagement-use cases that we're running. And so in all of those examples, there are certainly aspects of it that will require product investment for Giga -Hertz expansion, we balance those against our penetration into those markets, the nature of those markets, and we'll continue to put go-to-market resources closer to the locuses of customers, especially as we see the potential to grow into a very large market, or if there's particular ways that the traditional industries in those areas work. And so for all of those reasons, you should expect to see our international expansion continue and not be something that's finished in this year, but rather an opportunity that we continue to invest into for years to come.

Thanks, Bill.

Thank you, Mr. Peterson. Due to time constraints, we kindly ask the remaining participants to limit themselves to one question. The next question is from the line of Yun Kim with Loop Capital Markets, you may proceed.

All right. Thank you. Congrats on a continuous strong momentum, Bill and Isabelle. So Bill, can you just talk about the shift, vertical mix as some of the more supply chain impacted verticals like auto and consumer goods. While they are still healthy, may not have increased their marketing budget as much in the quarter. And just curious, does certain verticals carry meaningfully different gross margins of -- over other verticals? Thanks.

I'll tackle the supply chain side of it first. We started to get questions like this all the way back in the fall because people were obviously worried about incremental marketing spend in the face of constrained supply. And actually the best way to think about that is to go back to some of the question -- some of the answers I spoke through with respect to our analysis of recession impacts or other sorts of slowdowns in Europe, which is that when you are supply chain constrained, it doesn't mean that your need to communicate with your customers has changed in any way. In fact, when you have disruptions in service, that's often some of the most important times to be having ongoing communication and conversation with your customers in order to maintain the relationship or your service might be impacted. The other aspect of it is that while certainly we would expect a brand on the commerce space to spend less money to instigate or to create marginal demand if they don't have marginal supply to meet it, that when you look at engagement with already owned customers and already existing relationships, that that is the highest ROI place to be communicating and stimulating demand. And so while you might expect to see that broadly across the marketing space, you shouldn't expect to see that be problem in Braze's results because of those two primary factors. With respect to gross margin across verticals, I think that this is something where some of the kind of intuitive things that you would expect to see where maybe the LTV of a customer in a certain vertical industry is on average different than other places. We also feel just so early in our addressable market that we're able to qualify into the right types of businesses where we are able to maintain and actually improved year-over-year our pricing power in the margin profiles of what we're selling. The same thing that's true for geographies as well. Certainly there are developing markets where if we were trying to push into them more aggressively, we might run into pricing pressures, but our addressable market remains so large and we continue to see those markets developing. And so we're being patient about that to make sure that we're putting our resources and kind of prioritizing them into the right places. We continue to grow the business the way that we want to. And in the meantime, we obviously continue to invest in the products to improve the value that we can deliver to customers and be able to maintain those targets and improve them over the long term.

Okay, great. Thank you so much Bill.

Thank you, Mr. Kim. The next question is from the line of Patrick Walravens with GMP Securities, please proceed.

Great. Thank you. And let me add my congratulations. Phil, I loved hearing you say that Braze focuses on being respectful and a good participant in a relationship. We don't hear that often enough that's fabulous. My question is on the relationship with Twilio. Share that with my wife later she will love it, But my --so my question was the, can we get an update on the relationship with Twilio it’s been almost six months since Twilio engage came out, that they've been a great partner and then they have this product. So just love to hear where that is all sitting today.

So we continue to have a great relationship with Twilio. They've always done a great job of building tools for developers. And that's the reason that we will continue to have a strong partnership with them, both through market collaboration as we work on certain deals together. And is the c-past vendor for certain Braze channels like E-mail and SMS as we've spoken about in the past. I mentioned at the top when the question was asked about CDPs that we are deployed in a variety of different data footprints and different types of architectures. We're going to continue to be focused on making sure that we invest in our vertical integration. But there is always space for collaboration with CDPs as well depending on their particular customer. And so we continue to have great team work with the Twilio team. They're going to be an important multifaceted partner for the long term and that's something that will continue to evolve and develop over time. But we're excited about the potential future opportunities as we keep working with them.

Okay. Thank you.

Thank you, Mr. Walravens. The next question is from the line of Scott Berg with Needham & Company. You may proceed.

Hey, everyone. This is John Covina for Scott Berg. Thanks for taking my question. Just curious if you guys have seen any evolution up market in the buy versus build conversations, particularly around companies who are trying to do some more interesting things that they're dates back, just thinking in the context of obviously current in some of these other data connectors that you guys have been coming out with over the past year. Thank you.

I think when we look up market and we see Braze continuing to be a huge accelerant regardless of where you land on the build versus buy spectrum. We've been really focused on having an ability for people to build with Braze for a long time now. I mentioned at the top of the call that one of the ways that we're thinking about the vertical integration in our data story is also about the nature of the relationship between marketing our growth teams and the data science or developer teams that they work with in order to bring new customer engagement ideas to light. And so when you look at a lot of the trends in the space right now, and a lot of it is about helping data engineers and product engineers really work at the higher value-add points, getting out of the data pipelines, getting out of [Indiscernible], making sure that they can use more and more sophisticated APIs over time, making it easier for them to collaborate with the people that are closer to the business problems, like with the marketing and the growth teams. And Braze is really being architected to enable all of those. So when you look at the power of our APIs, our continued investment in stability at scale, and the ability for developer teams to use Braze as a more sophisticated primitive within their stack when they need to build certain parts of either the product offering or their engagement strategies. When you look at our Canvas tool, which continues to advance from the perspective of being a visual programming language and bringing that ability for more of an organization, not just those with computer science degrees to be able to really build sophisticated behaviors. When I look at a lot…

Great. Thanks, everyone.

Thank you, Mr. Berg. There no additional questions waiting at this time, so I'll pass the call over to Bill Magnuson for closing remarks

Yeah absolutely. Thank you everybody for joining us for this. We're really excited to continue to execute and continue to communicate with everyone as we're pushing ahead and growing Braze and thanks for all the great questions.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.