Everybody, happy Friday! It's warm and humid out there, but nice and cool in here. My name is Tyler Radke, co-head of the U.S. Software Sector here at Citi. Welcome to day three of our conference. To wrap up the software presentations, we're happy to have Braze, who's fresh off a good quarter that they reported last night. We have the founder and CEO, Bill Magnuson, and the CFO, Isabelle Winkles here to do a great presentation. So thank you for coming. I know you've been busy reporting just last night. Maybe for investors who are newer to the story, I think it's been a couple years now since you went public, just give an overview of who Braze is, where do you kind of play in the marketing ecosystem? Yeah, so, coming up on two years. We IPO'd in November 2021, an auspicious time, and founded in mid-2011, so we just passed our 12-year anniversary earlier this summer. Braze is a customer engagement platform, and, you know, we work. What that means literally is we work primarily with B2C brands to help them manage their first-party or direct-to-consumer relationships across all of the different touchpoints that they have, whether that's across web, across a mobile application, you know, engaging through a loyalty program, maybe it's through, you know, SMS or WhatsApp-type messaging. And, you know, ingesting data through the user journey, using an orchestration environment and a visual programming language that we have inside of our, the environment we call Canvas, to be able to orchestrate all of their different messaging strategies. And that can go from, you know, trying to help new users onboard, try to do promotional messaging, it could be transactional messaging. You know, if you're an on-demand food delivery company, we're telling you about order status and delivering receipts later on. If you're an e-com business, we might be telling you about Labor Day specials, or forgotten cart campaigns. If you are in the productivity space, we might be training people on progressively utilizing new features over time to become a power user from being a casual user. Braze works across about a dozen different major verticals and, you know, we'll talk more about the diversification of the business a little bit later. And, you know, and then being able to dispatch all that messaging. So we're primarily used by marketers, but we're used by, you know, what I would call the kind of evolving marketer. The advent of growth teams in the mobile world in kind of the mid-2010s was an important catalyst for our early product market fit and our growth, where you started to bring together more traditional marketing use cases and make them more data-driven and make them more experimental. That's a place where, you know, we really shine and differentiate and deliver a lot of ROI to our customers. And from a scale perspective, today, we're around 1,500 employees. We dispatch, you know, billions of messages. You know, every single month we process, Trillions of data points. Eleven... Yeah, trillion. We process trillions of data points on an annual basis, so, really large scale. Over five billion monthly active users across the kind of sum total of all of our customers' user bases. Yeah. No, it's a great overview, and kind of look forward to getting into to more specific areas. But I guess just starting off in terms of what you're seeing out there today, obviously fresh off the quarter, but maybe starting off the demand side, and then we'll get into some of the financials. What’s the mood out there with customers? As you mentioned, auspicious time to go public two years ago. Yep. The macro has certainly deteriorated since then, but- Mm ... it seems like you're starting to see some signs of stabilization. What are you seeing out there, and how are you... You know, are you getting more optimistic than you were at the beginning of the year? Yeah, I mean, I think that what we've broadly seen this year is that the macro in Q2 feels similar to the macro in Q1. But they're both, this year has felt more stable than, you know, the back half of last year. There's a few things at play there. One is just like, last year, marketers didn't know, you know, that I think that they weren't even operating in, like, a land of scarcity. They actually were preparing for their budgets to continue to get cut further and further and further, and they didn't even know where the bottom was. I think as we started this, you know, this year, a lot of marketers have more constrained budgets, but they at least know what they are. And, you know, that's causing them to then, you know, work through prioritization with a little bit more stability. The difference between stasis and, you know, having something that's predictable, even if it's constrained, is, you know, matters quite a bit for us. I think that in the marketing stack, you know, when you look at the ROI of engaging with your already existing customers and optimizing the value that you get out of those relationships, it's a substantially better value proposition than a lot of the acquisition channels. And so, when you see people pull back on marketing spend, if you were gonna kind of stack rank the ROI of all of your different marketing spend, you know, customer engagement is, you know, amongst the highest ROI that you're gonna achieve anywhere there. So, you know, we haven't been, I think we haven't succumbed to a lot of the optimization trends that you're seeing in a lot of other places, or a lot of the just outright cuts that you saw across a lot of the marketing space. I also mentioned at the top that, you know, we also do a lot of operational and transactional messaging. These are not things that are discretionary, right? Right. Like, as a business, if you're operating, you need to be communicating with your customers no matter what. And so, it's something where I think we've held up through that. But the thing that we need is for businesses to not be in panic mode, for them to not be in full stasis, and for their... Especially, you know, we'll talk about this more, I'm sure, a little bit later too, but, Braze is a premium price product. We are capable of sophisticated things. And that means that, you know, a lot of the time when we're displacing, like, a legacy marketing cloud, like a Salesforce Marketing Cloud or an Adobe or what have you, or when we're displacing startup competitors, it's because the customer is transforming the way that they do business. They're upleveling their operations around customer engagement, and they're doing so in a way where they're investing in a premium price product. We are highly confident in our ability to deliver a very positive ROI, even at a premium price point. But you need to be, you know, planning on a longer time horizon to feel confident that you should make that investment. Yeah. And so, you know, we've definitely saw the enterprise start to act more normally first. Enterprises tend to plan on longer time horizons anyway. You know, they're able to kinda deal with the you know rolling waves of a macro environment. But, you know, certainly small and medium-sized businesses, particularly those that are venture-backed, are still, you know, counting their dollars super closely. Their planning horizons, you know, are shrinking for many of them, actually, as they approach the end of their runway. And so we're predictably not seeing as much strength in categories like that. Yeah. I think it's more correlated with things like the planning horizon than it is with, you know, a lot of other things that I think people are focused on in the "front office." Yeah. No, that's great framing. And maybe going more specifically into the numbers, and I'll ask Isabelle a few questions. So if I look at the last night's results, you know, a lot of leading indicators appeared to accelerate. You saw an acceleration in current RPO bookings, really strong sequential subscription revenue growth. I think subscription revenue growth accelerated, billings accelerated versus Q1. It seemed very encouraging. I know there were some puts and takes on the quarter, and again, to Bill's point, you're not calling that things are getting better, but could you just kinda walk us through what we saw in the quarter and what maybe why investors shouldn't interpret that as a sign of things accelerating? Yeah. So a couple of dynamics at play, which I'll walk through. So on the sequential, it's important for everyone to understand that there is a seasonality factor. So we have 89 days only in Q1 and 92 days in every other subsequent quarter. And so the relationship between Q1 and Q2 always produces a very strong seasonal pattern there in terms of growth. So wouldn't read too much into that. We're very proud of our successes in Q2, but there is a seasonal aspect there. Then in terms of revenue acceleration, a couple of factors at play, 'cause the revenue acceleration, that's a year over year, so that's not related specifically to the seasonality. But there are a couple of factors at play. One is, we did close North Star on June 1, so you have two months' worth of contribution in Q2 that wasn't in last year, obviously. So there's a bit of inorganic in that number. It's about $1.8 million for the two months. We'd also only guided to about $1 million, so that's, you know, a good portion of our overachieve there is related to that. That's our Australian reseller that we purchased. Now operating as- Yep ... as Braze Australia. Braze Australia. Yeah. And then in addition, we were very- we were very pleased with this result, but again, one quarter does not make a pattern with our linearity in the quarter. So typically in a more normalized environment, and this was certainly true prior to the downturn, we close about 50% of our business in a quarter in the combination of months one and month two, and then the balance of that 50% gets closed in month three. What we noticed during the downturn is that was becoming a lot more back-end loaded. And certainly in Q4, extremely back-end loaded, where actually, you know, 50% of our bookings happened in the last few days of the quarter. So that is starting to... We saw that reverse or go back to a more normalized pattern in Q2, but we're not really ready to underwrite that as the net new normal because the macro is still challenging, and that, that is still the environment that's around us, and so you're seeing that in our guide. So our guide philosophy hasn't really changed. But if you combine actually the overperformance from North Star and the linearity, combined with, you know, the strong performance in Q2, if you strip that out, actually, our overperformance starts to look like our, our regular way guidance philosophy, kind of low to mid-single digits of kind of over-overperformance relative to guidance. So our guidance philosophy has not changed. There are just a couple of dynamics that happened specifically this quarter, that I wouldn't necessarily underwrite as permanent changes. Yeah. And it was interesting to hear the improved linearity and was that driven by just the changes you're making on the execution side, or do you think that was more a reflection of the composition of the business that you closed in the quarter? Yeah, so a bit of a combination of things. Yeah. I think there's definitely aspects to execution and, you know, things and patterns that we're doing with the sales team. So that is at play, but also, to a certain extent, if you've got deal slips, quarter in and quarter out, at a certain point, that starts to catch up with you. Yeah. And so some of that was the ability to close a number of deals that had been slipping, and the combination of that sort of came together in Q2. So that, that factor is at play as well. Yeah, but deal cycle is truly just elongated. Eventually, they close, right? Yeah, yeah. Eventually. We started to see that in Q2. Right. Right. Makes sense. So, maybe thinking about a bigger picture question, and you alluded to this, Bill, in kinda your opening remarks about how, where Braze sits is an area that the, you know, marketing stack that is getting more prioritised. You talked about how, Salesforce and maybe Adobe may be seeing some headwinds as, you know, companies have laid off workers and their seat-based model risks. But as you think about the application of generative AI potentially accelerating some of the forces going on in the market, how does Braze's potential to, you know, consolidate more of that spend change? And how do you see kind of the prioritisation of where you sit changing as generative AI rolls through? Yeah, so a lot of topic areas there. Yeah. You know, one, I'll clarify just on, in terms of the kind of ROI stack. I do think, like, the Salesforce Marketing Cloud or the Adobe Marketing Cloud occupy a similar position from an ROI perspective, and I make that distinction against the rest of marketing spend, like performance marketing and other sorts of investments that tend to be more discretionary, get cut more quickly. And so I think we're in a similar boat to them from that front. However, there's a few other things at play. There's definitely been, especially over the last years, a big slowdown in their ability to innovate. I think that the technical foundations, the data architectures, the fact that, you know, places like Salesforce Marketing Cloud have become multi-channel over time through acquisition, has led to relative stasis in their ability to innovate. And we anticipate that will continue as they attempt to inject AI. You know, unlike Braze, that's built on top of a flexible event-driven stream processor that has a proven ability to be able to continue to expand its surface area while still controlling that complexity. You know, we have an enormous amount of opportunities to be able to inject AI all down our stack, and we're doing that. And so that obviously helps create both benefits for us, but also, if you're a buyer that's trying to make sure that you're, you know, associated with the brands that are gonna be or with the vendors that are gonna be able to deliver you, you know, new innovation rapidly on the leading edge of what's possible in AI, you know, I think Braze is increasingly standing out as a shining example of that. Whereas, you know, with the legacy marketing clouds, it's really all talk and, you know, no product delivery. And so, one of the things that we're seeing from a vendor consolidation standpoint as well, is that I think the reality of a lot of legacy marketing cloud deployments at a lot of customers is that they bought a legacy marketing cloud expecting it to be able to be cross-channel, and the reality is they ended up largely only deploying it for email. So then, when they wanted to add SMS or mobile, or they wanted to add, you know, simple surveys, they wanted to add web messaging, they, like, brought in these new vendors. And so I think that a legacy cloud replacement today, because of how much Braze's product has expanded, and because of our credibility that has expanded across all these channels that's gone with that, is more likely to be a vendor replacement of three or four different vendors. It's a legacy marketing cloud, plus a couple of additional point solutions that were being used to, you know, to kinda shore up the limitations that that legacy marketing cloud had. We now have the credibility to go in as a comprehensive cross-channel solution and just take over all the B2C customer engagement that's happening in a given environment, and that's the vendor consolidation you've been hearing me talk about. And then I think that one of the quickest places that AI is coming into that picture is that in order for you to embark on that vendor consolidation journey, you've got to have a reason to pick your head up and do it, right? And there's two things happening right now. One is that, I think people from a technical perspective are scrutinizing their technical ecosystem to make sure that they're able to take advantage of new, you know, GenAI and other sorts of machine learning-driven advancements. And there's a lot of, I think, decision-maker pressure to do that. So that's one thing that causes people to pick their head up, look at the, you know, the mess of point solutions that they've assembled over the last, you know, five or 10 years and say, "Hey, you know, there's a better way to be doing this. If we can get our data streams consolidated, if we can act on them in more real time, you know, if we can use a vendor that actually is comprehensively coordinating across all these different channels, we'll be able to take advantage of all the optimization that comes with that." And then the other one, I think is actually, you know, not necessarily. I think that in a lot of cases, the vendor consolidation isn't merely leading to large budget savings per se, but the simple fact that there's scrutiny on the budgets in general is also causing people to be open to more change right now. It goes back to that time horizon aspect, though, like, you know, we're seeing this a lot more in the enterprise because the enterprise is still planning on a longer time horizon. They have confidence to be able to execute on, you know, longer-term transitions and transformations, and the catalyst for those transformations right now are a lot of the GenAI work and also, a lot of the just general scrutiny on spend and the budget, which it really benefits us because it catalyzes change. Yeah. Yeah, got it. Sticking on the competitive landscape, I was wondering if you could kinda give your perspective. One of the private competitors recently, you know, announced to go public and obviously, you know, they're looking at moving more upmarket. You certainly kinda own that enterprise customer. How would you just kinda articulate your core differentiation and, you know, how do you kinda see this market playing out over time? Yep. Yeah, so there's a couple easy proof points that actually show the differentiation between us and Klaviyo from a customer base standpoint. So, a few things, you know, that we learned from the S-1, 95% of their business comes from e-com. 77% of our business is not e-com. Mm. So, you know, much more diversified across verticals. Their average customer size is about $5,000 annually. Our minimum customer size is five times that. We also look through our own competitive data. Over the last 12 months, we saw them in a low single-digit percentage of our overall deals, and that's by opportunity count. So if you were gonna dollar weight that, it's much lower. So, there's some pretty clear demarcation between, you know, the customer base and the install base. You see it also in just customer count. You know, we're right around 2,000 customers. They're obviously substantially larger than that, but despite that massive difference in customer count, we actually send on the order of the same number of emails. Mm. and Braze sends substantially more messages. We process substantially more data because we're much more cross-channel. We're much more integrated into customers' data ecosystems, and we're orchestrating across, you know, substantially more use cases- Mm ... than they are, which is driven not just by, or I think, you know, the easy proof point is, like, you obviously can't operate across a dozen different verticals unless you're highly flexible and are capable of doing a lot of different use cases. Yeah. And so, you know, there's a lot of different places where there's differentiation. I think there's very clear, you know, demarcation in the market, and you see that in the numbers. I'll say, as an add-on, though, that, you know, the growth of Klaviyo certainly has been no surprise to anybody that's been in the space. And you started hearing us talk about our Start Anywhere, Go Everywhere framework, you know, over the last couple of years, and we've been working really hard to ensure that the on-ramp into Braze is a smooth one. We don't want, you know, there's a lot of reasons that you would graduate from a platform like Klaviyo. Maybe you wanna go cross-channel, maybe you wanna do more with real-time data, maybe you wanna be able to, you know, take advantage of the ability to inject more machine learning techniques into your, optimization of your customer flows by virtue of being across more channel. Like, the more decisions that you have to make, the more opportunity there is for automated decision-making to, to create value for you, using AI, ML, innovations to do that. And so there's a, there's a whole bunch of reasons why someone would graduate from something like Klaviyo to Braze, either as a brand or as an individual marketer looking to take on new skill sets. And what we've been doing for our part on that is to try to make sure that it's not, it's not a leap, right? You don't need to... When you graduate into Braze, it's not like this big, scary chasm you need to get over, but rather a smooth on-ramp that we can bring people up. We can train the marketers, we can help, you know, onboard these smaller businesses with the help of an agency community that we've been, you know, that we've been cultivating through our partner-led onboarding program. And so, you know, when we kind of broadly look at it, I think it's an incredible testament to just the sheer size of this market. You know, we look forward to, to not only, you know, keeping Klaviyo from coming and competing with us upmarket, but actually graduating, you know, a good portion of their customer base into, Braze over time. And I think that there's great opportunity for that to coexist. You know, I think that, you know, Klaviyo will continue to make great strides against probably the Mailchimps of the world, right? As they kind of upgrade people from just sending newsletters, right, into, you know, being a little bit more like event-driven in the e-com world. You know, up here is Braze, and, you know, we're working hard to move the overall marketing community to be more sophisticated over time. And that's something that, you know, has really been part of our product and community strategy through our whole existence, and I think that that creates a pretty clear delineation. Yeah. No, that's awesome. So you talked about, you know, roughly 2,000 customers today. I think one of the feedbacks we've heard just in terms of doing our diligence on Braze is it's an unbelievably powerful platform, but sometimes the ease of use and technical capabilities can be a bit overwhelming, especially for smaller customers. So can you talk about how you're using-how you're making it easier to use, to your point around the onboarding, what you're doing there, and then should we think about that as a way to maybe accelerate the growth in total customers? Yep. Yeah, I mean, so we're hitting this on all fronts. You know, and actually, when we talked about sales team execution last night, you know, a big part of what we've been focused on over the last year, especially competitively, is making sure that our differentiation is accessible- Mm-hmm ... and that our customers perceive it as being accessible. Because to your point, like, it embedded in that statement is that it's obvious where Braze differentiates from a capability standpoint. But if a customer doesn't see themselves actually being technical enough or data-driven enough or agile enough or whatever, to be able to actually utilize those differentiated capabilities, then it's harder for them to justify paying for them, right? Right. and so a big part of what we've been doing in sales cycles is making sure that when someone asks, like, "How do you differentiate?" You know, 18 months ago, our teams were more likely to gravitate toward our most technical capabilities, right? And then, you know, the wide-eyed marketer is like: "Oh, man, I don't like... You know, I don't actually see myself using that." Instead, you focus in on, like, you know, the, the ability to actually run experiments and to be able to optimize those experiments and to be able to get data insights out of those. You know, we're doing a lot of work on the product side to automatically surface the data insights, to use AI and machine learning to automate the optimization of the experiments. Now, we're increasingly able to actually use generative AI to in two really great ways, is that, you know, if you, if you think about the plight of the one-person marketing team at a brand, and you say, "Hey, we are going to be able to drive a ton of value for you by running multivariate experiments, being able to iterate on, you know, your data insights and learnings. Every single week, you'll have new learnings that you can put to work to try to tweak this strategy and uplevel that one." And all they see is more work for themselves, right? Right. and that's, you know- Mm. That can be a little bit terrifying. But to the extent that we can use generative AI to help inspire them, where it's like: Hey, you put in, you know, one subject line, or you put in one bit of copy to try to re-engage a customer through a push notification, or you, you know, did this one email body. We're going to be able to use an LLM to recommend five other approaches to that. One of them's going to, you know, going to be FOMO, one's going to be matter-of-fact, one will be snarky, one will reference a current event, you know, one will whatever. You know, these are things that are, that are very—you know, it's, it's difficult to even just be one person and come up with these, much less refine them all and then incorporate in multimedia and images and everything else. So to the extent that generative AI makes the individual marketer more productive, more creative, more inspired, that helps them access our differentiation- Mm ... through from an experimentation standpoint. There's also the technical side of it, which is that there are aspects of our personalization that require that you can do basic scripting, right? Or that you can engage with a bit of SQL, or like the data transformation product that I mentioned on my prepared remarks last night, literally uses JavaScript in order to take the incoming data stream and map it onto the user profile. It's incredibly powerful and flexible, but it's not accessible if you either don't have a buddy over in engineering that will help you write that, or you don't understand JavaScript or whatever. And so the fact that we now can actually use generative AI code generation to allow someone to just type in what they're looking for, we then are doing the prompt engineering to make sure that it knows about all the schemas, and it knows about the proper syntax and everything else, and can actually generate the beginning point of that, not only makes that feature more accessible, but it also emboldens the marketer because it helps hold their hand to actually learn that new skill. Mm. You know, it's much easier to edit, like, understand and edit a lot of these things than it is to produce them from scratch. And when we kind of think about, what does that on-ramp look like? You know, generative AI is a super useful way to smooth out the beginning of that on-ramp. And, you know, over time, what that compounds into is an entire marketing community that is more comfortable using these more advanced capabilities. Mm. And so, you know, that's... I think it's a spot-on observation. It's one that we're working on a lot of ways. We also, from a customer education standpoint, you know, we've been expanding out our instructor-led training, our online, you know, Braze University. We've been expanding out our Braze certification program. And we've also been, we've also been investing a lot in the agency community, so that if you don't feel like you have that in-house, we have, you know, Braze-certified agency partners from, you know, small, digital growth agencies and marketing agencies, all the way up to, you know, the big agency holding companies and the GSIs that are building practices around Braze so that you can supplement your own in-house, you know, teams. But all of that also, you know, some of that goes back to the Klaviyo point I made earlier about the graduation, too, which is that this is all a journey that the whole marketing community is on. And we know that imparting these skills, operating in a more agile way, being more data-driven, you know... Partnering more closely with technical people, either in your company or imparting those technical skills in your marketing team, they all provide incremental ROI. Mm-hmm. They all compound together. These are absolutely things that businesses, like, should be and are going to be investing in over time. You know, when we talk about the secular tailwinds that really support us, it's all of these things. You know, we do a lot to invest in smoothing it out, accelerating it, and continuing to kind of grow with our customers in that way. Got it. Got it. So I guess, do you ever see yourself going more downmarket in a self-service way? And your entry point is still pretty high, but- Yep. Could that come down over time? So it actually has. Yeah? You know, we over the last, like, several years, we've gone from a $40K minimum to $36K to $30K, you know, we're sitting at about $25K right now. You know, that's something where, as we get more comfortable with our ability to scale the services ecosystem, the training, you know, bring on customers at that level, you know, those are. We've been, you know, that's been coming down. I don't, you know, it's not a massive goal to get that all the way down right now. We are also working on kind of automating, in a self-serve way, cross-sell and upsell first, before we think about how do we bring a customer from zero to one into Braze. But actually, once we have a customer in Braze, even if they started out on one channel, you know, but they know how to use Canvas, how do we make it so that they can expand into other channels and expand into other features in a much more seamless way? So we're focused on that as the first priority for things like our product-led growth investments and being able to have customers kind of self-serve or, at least like, you know, raise their hand and fully automate the sales cycle from there, in order to make our sales team more efficient as we're helping people expand to new areas. There are aspects to things like email and SMS that will continue to be, I think, differentiated in this way, where, you know, Klaviyo or a Mailchimp, and this is a bit of a technical concept, but they allow you to send through shared IP pools- Mm. where you don't need to deal with things like domain reputation and IP warming, and all that. That means that if you are trying to differentiate with your delivery rates and not be in the promotions tab and actually show up in someone's, like, proper inbox, it's very hard to do that when you're in a shared IP pool, 'cause everyone that's sending through that shared IP pool is basically getting sent to the promotions tab. Braze customers, by contrast, every single one of our customers has to manage their own reputation. Every single one of our customers owns their own IPs. They, you know, they have their own sending domains. They, they are responsible for their own sending domains reputation. Obviously, we help them manage all that. Mm-hmm. But the point is that they're not in a big shared pool, right? Right. And so that's something that actually creates some... You know, that creates a floor. You have to be at a certain level of investment before that is something that you're ready to do. There are tremendous benefits to it, though, and that's just another example of something where, you know, when you're ready to graduate to actually managing your own reputation and accruing the benefits of that, you know, moving to something like Braze is the right way to do that. Yeah. Well, I wanted to ask Isabelle, just about the, the margins and, and implications. I think people may kind of underestimate all the, guardrails you kind of have in place at Braze to, to protect the, the gross margin line. Obviously, it's a very, consumption, heavy, heavy business on the, on the back end. Can you just talk about, some of the initiatives you're thinking about, you know, on the cost side, especially as you, you invest in generative AI and, and, and potentially, go downmarket to, you know, a smaller deal size? Yeah. So we've been doing this sort of the whole time, and really looking to get economies of scale at a large level across a number of our large vendors. And so, as we've been growing and scaling and just having purchase power, we've been able to sort of continue to negotiate, renegotiate contracts with our- some of our largest vendors. And so that, I think, as you've seen, actually when I, when I joined, actually, there was sort of an internal forecast for our gross margins, and they were kind of going the other way. And I was like, "Mm, that we have a... No, this is not okay." Pulled everybody together, and we now have a cross-functional team that, for the last three years, has basically met quarterly to talk about what are we doing to effect positive change in the gross margin cost structure. And so that sort of internal discussion is ongoing. The tech stack component of the gross margin number, it accounts for, call it, 70% to 75% of the total. So obviously, we put a lot of effort into continuing to manage those contracts. We also do... You know, we're constantly looking at our, sort of, own internal hygiene, data retention, and other things, and making sure that we're meeting all of our internal compliance requirements, but not going over, and making sure that that is as clean as it can and should be, in order to manage our own cost structure. On the people side, so that is the balance of that. That is relevant as well. We've been looking to kind of continue to inject even things like AI to make them more efficient, to bring their on-ramp on more quickly and make them more productive. And so we need fewer people to do the same work. Actually, then, using some of what we've been piloting, maybe for more of the SMB customers, and moving that up to the enterprise customers, to make our SMB for our CSMs just more productive more quickly, to take our support folks and make them more productive. If you can have... We're not yet at the point where a case can be fully answered by a chatbot, but the chatbot can get it, like, 80% of the way there. So if you can deliver that to an internal human, who can then read it and say, "Okay, yeah, this is mostly right, but these three things need to be modified," you can get answers out and support tickets dealt with a lot more quickly. Mm. And then the last piece of this puzzle, which we haven't yet sort of fully cracked the code on, but I've been talking about it, is all of our humans today are based in the highest cost locations around the globe. And we just opened an office in Jakarta, which is a little bit of a differentiated cost structure, but we have plans to open an Eastern European location, and then we're looking at potentially some opportunities in Latin America, and that is gonna give us, A, time zone alignment with what we already have from a follow the sun approach, but also an ability to tap a new market of employees on a differentiated cost structure. Yeah. That's interesting. I think, I mean, Indonesia's been one of the fastest growing international markets, at least on the e-commerce side. I guess just tying back to long-term margins, how- Yeah. Just remind the audience how you think about that pace of long-term margins. You know, is this a 20%, 30% operating margin type business over- Yeah -time? Yeah, so from a gross... I'll start with gross margin. So from a gross margin perspective, we're already operating well within our long-term range. So we declared- when we IPO-ed back in November of 2021, we declared 65% to 70% gross margin, and then in October of last year, so almost a year ago, we actually increased that range to 67%-72%. We just printed a quarter at 70%, so we're already well within that range. And we actually don't really wanna overachieve on these metrics, because any available opportunity that we have, we'd like to actually reinvest those dollars into the business in order to make the product better, faster, more featureful, easier to use, et cetera. And so that does have implications to gross margin, and so we wanna make sure that we're investing appropriately. In terms of non-GAAP operating income margin, our long-term target is about 20% positive operating income margin. We have, for now, declared a path to profitability that has two milestones. One is -7%, better than -7% non-GAAP operating income margin in Q4 of this year, and then break even by Q4 of next year. Those are the only components that have time horizons associated with them. We will then figure out in years beyond what the path is to that positive 20%. In terms of the components of our cost structure that need to come down the most, it really is getting operating leverage out of the sales and marketing organization. When I talk about reinvesting available dollars into the business, you can actually think of R&D spend as probably the line item that we'll track the most closely with top-line growth. And that's important for us from to continue to differentiate and kinda maintain our moat going forward. Yeah. So, so Bill, we talked a lot about several of the growth drivers. You know, you have expansion in industries, international growth. You obviously have this opportunity to graduate kinda low-end users coming on the platform. How do you think about the stack rank of kind of the three biggest opportunities that you're focused on at Braze that can really drive or accelerate growth over the coming years? Yeah, so I, you know, I think that one of the great things about Braze is that the broad diversification that we have has given us a lot of optionality to be able to, you know, start, you know, start each year, new economic cycle, what have you, really looking at where there are relative areas of strength and weakness to make sure that we're, you know, efficiently driving expansion dollars. And so, you know, when we look out over the next couple of years or, you know, at least over the near term, where we've got, assuming that macro conditions are consistent, you know, especially given the weakness kind of in the SMB world, the irregular and low venture capital dollars, et cetera, I wouldn't expect us to see, you know, us pushing much into the SMB market right now, because there's a lot of cost pressure down there and not a lot of funding, et cetera. You know, and really seeing more focus on the enterprise and the global strategic accounts, because that's where we're seeing those, like, longer planning horizons and such, at least in the near term, until we see things, you know, start to shift. We also have a great ability to be able to shift resources globally. You know, 43% of our revenue is outside of the United States today, and we've got, you know, kind of a global base of operations, and we're able to move marketing dollars and other sorts of, you know, incremental hiring, depending on where we're seeing strength. You mentioned Indonesia being a fast-growing market. We opened Jakarta just this year, and that's in response to, obviously, great opportunity that we see to be able to grow there. I think that channel expansion is something that is, you know, consistently a great expansion vector for us because it lets us... One of the great things about when we expand our product to new channels is that it's not just an upsell opportunity, it's also an opportunity for new lands. And so we have customers that start with Braze today that don't even use, like, mobile apps. They don't have push notifications. They don't use those channels at all, because they're able to come in and either run their email program, or maybe they wanna only use SMS, or maybe they're only using our in-product messaging on their website, you know, which is something that we also see in new customers. And so, our ability to really have these new land opportunities as the product expands is definitely something we'll continue to invest in, because all of what that creates is new opportunity to grow those accounts in the future. And so I think that's something that's always on. And then a lot of the stuff around verticals and geos and company sizes, you know, we're really kind of constantly evaluating a portfolio of expansion opportunities and making sure that we're matching our efforts where, you know, we see the ripest opportunity. Yeah. So you talked about how the enterprise obviously has longer time planning cycles, which is great, especially as macro stabilizes. How do you think about the ability to increasingly invest in kind of the traditional industry segment? You know, the Citis of the world, kind of these older world companies that may not have been, like, a natural buyer of, Yep -your technology early on. Like, where, where are we at in that adoption cycle? Yeah, I mean, I think Braze has always sold to... Myles Kleeger, Myles, our President, Chief Commercial Officer, characterizes this as selling to the disruptors and the disrupted, right? And I think, like, a really great case study in that is that if you were to look at our customer base five years ago, you'd see this huge strength in on-demand and delivery. We, you know, work with the who's who of that around the world, and it's obvious why, right? Like, real-time, event-driven, mobile, et cetera, like, it's kind of right in the sweet spot. And then one of the things that those businesses did is that they disrupted the traditional QSR world, right? The quick-service restaurants. The quick-service restaurants were like, "Oh, hey, we kind of had ended up with a Faustian bargain here," where we partnered with them because we needed delivery. We thought it was incremental revenue, and now our loyal customers, like the delivery apps, have all the data, they're taking all the margin, and, like, you know, the repeat orders are being catalyzed by our brand advertising and our product, but they're, you know, making all the money on it. We need to change that. We need to build our own mobile loyalty programs. We need to have, you know, curbside delivery and pickup. You know, some of them have built their own delivery programs, et cetera. We need our own mobile wallet and ordering. And so Braze has now become dominant in the QSR space over the last few years because, you know, we were also there with the disruptors. So when you look at, like, financial services, we also have a dominant position with the kind of who's who of the challenger banks around the world and the, you know, the trading platforms that are kind of younger and more agile with the cross-border remittance, you know, payments. And, like, there's a bunch of areas of financial services that we're very strong. You know, one of the things about banks that are too big to fail, you know, highly regulated, capital-intensive industries don't feel disrupted very quickly, right? And so those are places where we're being, you know, we're being patient. You know, we're definitely, if you kinda chart out the path, like, financial services is a really important vertical for us. It's been growing really fast. We've got a lot of great logos in it. It's kind of the who's who of innovators in the space, and, you know, we're excited for the traditional finance industry to wake up to that opportunity as well. Awesome. Well, on that note, I think we're out of time. Bill, Isabelle, thanks so much for joining us on Friday. Thanks for everyone for sticking around, and have a great weekend. Yeah, thank you.