Happy Friday and welcome to day three of Citi's Tech Conference. I'm Tyler Radke, Citi's Co-Head of U.S. Software. To kick things off this morning, we're happy to have our friends down the road from Braze. We have CEO Bill Magnuson and CFO Isabelle Winkles. I think this is the third year in a row you've joined, the morning after you've reported earnings. I appreciate you coming to the conference. I know it's a busy time. Bill, for folks in the room, if you could just give a quick overview of the Braze story and help folks understand the business who may not be familiar. Yeah, of course. Braze was founded in 2011. This was just our 16th earnings cycle as a public company. It went out back in 2021, and obviously in the customer engagement space. Really excited to be, I think, in customer engagement at this point in time as well. Obviously, a lot of the new capabilities being made available through Frontier AI advancements have been really exciting in our space. I think that throughout our history, a big part of Braze's goal at a conceptual level is to have a stronger understanding of the context that surrounds customers, understanding that context as it evolves, and being able to make sense of it in real time so that brands can use intelligent software to be able to understand their customers better and then use that understanding to build stronger relationships with them. We literally do that by orchestrating and personalizing the messaging that gets delivered to consumers, as well as the direct-to-consumer product experiences through first-party channels, all informed by first-party data. Helping primarily B2C, there's also a lot of B2B use cases in our customer base as well. Companies manage their relationships with their end customers. There have been, I think, great tailwinds to our growth, in particular over the last five or so years, as more and more companies across every vertical have been reprioritizing their own priorities as brands to be able to build stronger first-party data sets, be able to build stronger first-party connections with their customers. I think that we've seen that happen because of a lot of the dynamics around there being different demand and attention aggregators in more and more parts of the digital consumer experience. The importance of brands to be able to have direct connections with their consumers has been growing more than ever. I think that Braze sits at the convergence of a lot of really important generational trends when it comes to consumer technology, to brand priorities, and obviously then also the technical capabilities. I think that we've always differentiated within our space strongly through our technical differentiation, trying to bring a lot of power and sophistication to a space that we think demands it because of the complexity of modern consumer journeys and just how competitive so many B2C spaces are in a world where, you know, obviously things like the mobile app store and digital payments and the footprint of smartphones, which through our lifetime have now become, you know, I think the most widely spread technology of all time. That means great opportunity for consumer brands. It also means that the vast majority of verticals operate in globally competitive landscapes as well. It's all that much harder to compete for consumer attention, loyalty, wallet share, etc. Those things have all, I think, forced this space in particular over the last decade to be one where you need to be more sophisticated every year, or else you're falling behind. Braze was built to be at the top of the sophistication pyramid in customer engagement, arm our customers with intelligent, elegantly designed software that can really tackle the complexity of this space and really deliver on all of these use cases at massive scale. It's a great moment to be in customer engagement right now. Yeah. You talked about how there's been a lot of tailwinds to the business over the last five years, obviously the rise of digital that got accelerated during COVID, the proliferation of phones and mobile app stores. I'd just be curious how you think about the next five years, specifically as it relates to AI. There's a lot of concerns out there in the market just around traditional software application vendors. We saw this week Salesforce kind of had disappointing results again. On the other hand, I'd say that Braze, as a company, doesn't have a lot of those same characteristics, whether it's not a seat-based model. You're tied to kind of more of the consumer side, B2C. You did see some pretty strong results last night. Can you just talk about how you see the AI tailwinds, again, maybe more over the next five years, not today, being a secular growth driver? Yeah, so I'll kind of break this down in two ways. First, I think that there's a lot of properties of how we built our business and approach our business model that we will now describe as being associated with being an AI-native company. I like to say we were doing that before it was cool. We never charged for seats because we wanted to make sure that teams could collaborate within Braze across different functions. I think a big part of delivering on sophistication means that you need to have interdisciplinary collaboration. Braze differentiates within the marketing space. Why we are a customer engagement platform and not merely marketing automation is because of the strong collaboration amongst data science teams and product teams, along with marketing, of course, that exists within our customer base. I think also we've always been consumption and outcome-based in our pricing, charging our customers as an engagement platform. Our primary pricing unit is for monthly active users, which is the number of engaged users that you're managing to continue to keep engaged within your customer base. Similarly, message volumes and consumption through that. I think also from a data perspective, we've never been a company that relies on having like a proprietary data model locked up in our SaaS solution in order to keep customers. We've always had flexible and open APIs. We don't rely on the sunk cost fallacies of complicated and long integrations. Braze is a quick-to-integrate, highly agile software solution. We've always been focused on making sure that we're delivering differentiated value to our customers in order for them to stick with us. I think also we were early to embrace the truth that the value of data to your organization starts deteriorating as soon as it's generated. Braze has, from the very beginning, our underlying data processing infrastructure has been event-driven stream processing. We've always been focused on being able to derive insights and context, like meaningful context and semantic meaning from the flow of data as it's being generated by consumers. Obviously, that gets augmented by the broader kind of data warehousing landscape that a brand will have. There are other important data sets. We knew that the differentiated data capability would be about being able to live in the flow of the data and be able to make sense of it in real time and be able to really understand the customer's context throughout that. I think that when we look at the combination of those things and then go back to the comment I made at the beginning, which is a big part of the goal of Braze, is that we want to be able to ingest the context of large consumer audiences, be able to make sense of them in real time, and use intelligent automation in order to then drive more meaningful interactions with customers. When we look at the capabilities that new advances in Gen AI and reinforcement learning bring to us, they're making the intelligence step in the middle more and more capable. That is allowing for the systems that we rely on to do automated decision-making at scale to be able to be more autonomous and more intelligent. That is really just a driver of the vision that we've been trying to build for a long time and being able to actually realize it more quickly and more comprehensively. On the interaction side, I think that a lot of the push for, or a lot of the evolving consumer behaviors and the fact that there are more and more channels that are relevant if you want to be able to keep up with a modern consumer, and that continues to proliferate. That actually demands an architecture that can manage the complexity of a multifaceted customer journey and be able to keep track of it in real time. Those kind of demands that we were built for in the beginning due to mobile only continue to be more true. I think that the second side of the advent of new AI in particular, like chatbot interfaces and answer engines and what have you, is one of the most important things from our perspective to look at is looking at that as a demand aggregator and as an intention aggregator effectively. It's not dissimilar to a bunch of other categories that we've seen be disintermediated by aggregators in the past. In the Braze customer base, you actually see we work with a lot of streaming platforms. We work with a lot of quick service restaurants. We have an increasing portfolio of travel and hospitality brands working directly with hotel and airline brands. The similarity across those is actually that in each category, those brands that deliver those products and services have been historically disintermediated by aggregators, right? On the travel and hospitality side, it's things like Expedia and other, you know, online travel agencies. On the quick service restaurant side, it's the delivery companies. On the streaming side, it'd be the likes of Netflix, where the content providers understood that they needed to go in more and more cases directly to their customers in order to be able to have them be their customers and be able to build first-party data on those relationships and use them in other ways. All of those are important second-order responses to that aggregator being in the middle. The same thing is also true when you look at, for instance, e-commerce brands who have needed to respond to the kind of advertising platforms that have been soaking up all the profits in their category, whether that is Google's SEO and the SEM marketing that they've had to do over the years. If a customer goes to Google first instead of going directly to their website, they need to engage with that. The same thing with Amazon. You've seen a lot of brands that have switched their strategies since Amazon started building their ads business. It was a great gig when you could be in the Amazon Marketplace and you could get those eyeballs. Now that Amazon extracts the profits from that space by running an advertising business as well, there's a strong incentive for brands to go back to developing their own storefronts and making sure that they can maintain a direct connection with the customer that is informed by the first-party data that allows them to communicate through whatever channels happen to be available given that consumer journey. When they accomplish building a first-party relationship that is more direct like that, it's more profitable, right? They can deliver a better product and service to that customer because they understand them better. They can absorb more of the full profit of the transaction that's happening. I think that when we look at the advent of chatbots and answer engines and what have you, we can look to these other examples where aggregators entered markets as a guide for how we think brands are going to respond. Certainly, we're already seeing this to some extent. It really underscores the importance of making sure that if the buyer journey is going to start with doing research with the chatbot or is going to involve using a chatbot to engage with the brand as an aggregator would, you need to respond to that by creating incentives for the customer to have a direct connection with you, or else you end up being a commodity below that aggregator. I think that brands across a lot of verticals have been grappling with this reality for a long time. I think that the flexibility of chatbots means that if you are a brand that hasn't dealt with this in the past, you're going to be. In all of those cases, it really just underscores the importance of exactly what we do, which is building up first-party data sets that give you a strong understanding of customers, maintaining first-party connection with them so that you can communicate with them in a low marginal cost way, and making sure that the systems that drive those activities are as intelligent as possible so that you're showing up with relevance and you're building high-quality relationships that a customer wants to stay opted into and where they want to stay connected to your brand so that you can build a much more profitable connection with them over time. Right, right. Yeah, that's a great analogy just around the aggregators. Is this something that you're seeing start to play out, or is this kind of more your expectation on how the market evolves? Yeah, I mean, I think that we're definitely already seeing, in particular, commerce brands continuing to respond to this. There's a bit on the answer engine side, which is like, how do I modify the way that my brand presents itself within these chatbot interfaces? I think that there's still a lot to be learned there. There are certainly early ideas around how AEO is going to play out versus the way that SEO did. There's interesting things there as well where a lot of AEO work has been done in 2025, and then GPT-5 drops and it was trained on the internet circa 2024. Your changes that you've made this year aren't going to show up for a little while. We're still very much early days on a lot of that stuff. A lot of the systems are kind of a black box to be able to interact with. The circumstances around responding to aggregators and responding to a layer in your market that disintermediates you from being able to build those first-party data sets, these are all effects that I think are well understood. We've been through multiple generations of them. I think that the playbook for how to respond to that as a brand is already pretty clear. Right, right. Got it. Maybe it's a good time to bring Isabelle in just to talk about the numbers a little bit. Obviously, strong results last night, even though you did have some contribution from OfferFit, organic revenue in particular accelerated. Did you see any changes in the demand environment? Was this just better execution, deal timing? Walk us through the key highlights and reasons to be increasing optimistic or not about the results. Yeah, for sure. I think it was a variety of different things. Just to OfferFit really quickly, just to kind of get out of the way, because I do want to spend more time on the organic part of the business. From an OfferFit perspective, they delivered basically exactly what we had anticipated. We had talked about them adding about 2% to year-over-year revenue growth, and we're totally on pace for that contribution. From an organic perspective, we've been putting into motion a number of initiatives over the last several quarters that are now finally starting to play out, and you are seeing it in the numbers. We're obviously a run-rate business, a subscription-based business, and it takes time for some of that stuff to kind of work itself through the numbers. Things like our investments in our verticalization initiatives that we talked about were starting to bear fruit even in Q1, and that's continuing to do so. The efforts that we've made around implementing efforts to reduce downsell have been playing out, and that's been happening both in Q2 specifically, but also line of sight to better performance on downsell through the back half of this year. We've been doing a couple of things specifically on downsell. One is ensuring right from the get-go that our implementation and onboarding for customers is as rapid and effective and efficient as possible, making sure that all of the entitlements that they've purchased are up and running so that they can get the most out of what they have paid for as quickly as possible. Two is just having better line of sight and visibility to places where there are potentially concerns with upcoming renewals and being able to have eyes and arms and legs on that problem early enough to be able to do something about it. Having done better implementation and onboarding means that actually there's less of that kind of problem to see coming up in the future, which means that the resources that we have are able to be more effectively deployed to actually save potential downsells in the future. Lastly, we have made our way through some of the downsells and full logo churn with business health concerns with some of our smaller customers. Some of that has just shaken itself out. Those three things kind of combined together really help us be in a better position from a downsell risk perspective. The momentum that we're seeing on the upsell and the new business momentum is actually very strong at the moment. We're really pleased with how all of these things are coming together. Our sales force is more productive, and we've been talking about improvements that we've been making there with enablement for the sales team. We will be adding a little bit more sales capacity in the back half of the year. We're excited to have a strong demand environment and feel like we can continue to grow the sales force and keep people productive going into next year. That's going to help support our growth profile. Yeah, just on that downsell point, I know that's been sort of a lingering issue, partially just given you have some multi-year contracts that had large expansions in the early part of 2022, certainly 2021 as well. As you look at the back half of this year, how does kind of the health of that renewal base look? How are you incorporating that into your guide? Yeah, like I said, we have better line of sight to those numbers. The numbers are improving certainly versus our expectations from even one or two quarters ago. With the numbers being a little bit smaller, having done a better job with the implementation, having fewer places where we have to kind of swarm and make sure that we can save things where possible, we're in a much better position relative to one or two quarters ago for the back half of the year. We are very encouraged by that direction of travel. You're seeing it specifically play out in our in-quarter dollar-based net retention. I think this is the first quarter where we've given quite as much transparency and visibility on that, literally comparing Q1 to Q2 on the in-quarter piece. You're seeing slightly below 107% going to slightly above 107%. We are, again, very encouraged by those results. Yeah, we love the intra-quarter transparency. Yeah. Yeah, and for those new to the story, our average weighted contract length is in excess of a little bit over two years. It's definitely something where going through and working our way through kind of the after-effects of the [serve] buying behavior certainly took a while to be able to get through a customer base that does have a lot of those long-term contracts. We've got most of those in our rearview mirror now. It's great to see. Yeah, and Bill, on the go-to-market, there's been a number of changes there. Obviously, Myles, who's been with you since well before the IPO, was kind of moving on. You announced a new CRO. Give us an update just on kind of the state of the union on the sales team. I imagine it's kind of more of an upbeat mood, better retention. They can focus on more exciting stuff in terms of, you know, new logos or upsells. What are kind of your key observations just on, you know, the priorities and, you know, tone of the sales conversation? Yeah, so I think two big events in the quarter. First is that we closed the OfferFit acquisition in early June. The second is that Ed joined as our CRO in early July. We're only three and two months respectively away from those having happened so far. I think in both cases, there's obviously always a little bit of a cone of uncertainty around big events like that. In both cases, I think that the OfferFit acquisition and the subsequent integration has been running rapidly and smoothly. In general, it's kind of even surprised on the upside to some extent about the pace at which we've been able to smoothly move the integration. That's inclusive of both the people and the technology side of that. I've been excited to see that, but still a lot of work to do, a lot of moving parts to be able to ingest a team of that size. In particular, obviously a really important part of the roadmap. We're excited to share a lot more about the fruits of being able to bring together the R&D efforts of both the Braze AI teams as well as the OfferFit teams and really share more about our AI vision at Forge later this month. I encourage people to give another plug for that. We'll be out there, I think, September 29- October 1. Having Ed on board, he's been here for just two months now, I'll remind everyone, definitely still going through diagnosis and observation to be able to look at all the global regions that Braze operates in. I think that in general, Ed and I are very aligned on what the high-level strategy is. You shouldn't expect any sort of big disruption in terms of what our go-to-market priorities are, but definitely a sharpening of the focus and the strategy, being able to rely on Ed's experience and the conviction behind sharpened strategy that comes with that experience. I think that the consequences of that on things like verticalization and our partnership strategy and such is just that by having that focused execution on the field teams, we'll be able to provide better support from places like R&D and product marketing and other sorts of marketing investments to make sure that we just have more places where the whole company is aligned behind these important go-to-market priorities. Yeah. Isabelle, you talked about adding go-to-market resources, quota-carrying headcount in the second half, and kind of a strong demand environment to support that. I feel like it's been a while since we've heard you use those words. Was this sort of an incremental investment based on the trends you saw in 2Q? Just give us maybe a little bit more color on what's leading to that confidence. Yeah, every year when we're doing the next leg of long-range planning and our next year budget cycle, we're always evaluating our ability to add headcount capacity at any given point in time. There's always a scenario that has added headcount capacity, and we want to always make sure that we certainly can fund it. First of all, from a profitability standpoint, our ability to now add the headcount is incorporated into our profitability guidance. Just seeing the level of productivity of the sales force, I never want to be in a position where I feel like I'm pushing on a string. We've been careful and measured about adding sales capacity because we've been talking about carrying a little bit more capacity than where we've been punching. We've been punching a little bit below our weight there. As we have improved the overall delivery of rep productivity, we feel more comfortable with our ability to now add capacity to help support the growth into next year. We never want to be in a position where we don't have enough productive territory for our reps to make money. Just seeing the trend lines and the reps having to spend less time, as you indicated, on the renewal cycle and having to deal with potential downsell risk, they are able to spend more time building pipeline. We're really excited about both how the existing pipeline is performing, but also how the pipeline is building through the back half of the year. OfferFit actually is a good, strong part of that. We're really excited about how things are shaping up for the coming quarters. I think things like the, and we've referenced this over the last few quarters, but the changes to our flexible credits model have obviously given some time back to our sales team as it's being a little bit more fungible unit. It means that you can move through negotiation faster. Customer sentiment around the ability to buy in that way is more positive. That speeds things up both at new business as well as at renewal. Also, the decisioning conversation is an important one right now. The OfferFit's decisioning software and also just more advances in the kind of intelligence layers that live above these orchestration decisions and are able to make optimizations around different strategies, as well as being able to drive higher performance out of places where reinforcement learning can contribute. These are all really important places where, in particular at higher scale businesses where there are high-value actions like a free trial to a premium subscription conversion or moving someone from a single product to a multi-product, whether that's a bank trying to sell lines of credit to their checking account users, or it's a delivery application trying to get you to try grocery delivery for the first time after you've been doing ride share or late-night food or what have you. These are all great examples where I think that the ability to sell those decisioning products is going to be very strong into next year. We certainly expect that our sales team will be, as we begin next year, we're expecting to have the entire Braze seller base be ready and enabled to sell both customer engagement as well as these decisioning products. That's obviously a really great position to be in as well. Yeah. In our conversation, I think you've talked about this in the past. I mean, just the level of technical sophistication in the Braze product, I think, is very impressive. In some cases, your core audience are marketers that may not be as deep in the weeds. I'm just curious, given the rise of AI, some of these new capabilities that you're bringing on, how has that conversation changed at all? Are you engaging with more CTO technical folks in addition to marketers? Are there things you got to do to kind of augment the technical capabilities of your sales force? Yeah, I mean, I don't think we're in a position where we need to augment just because that's kind of the game we've been playing the whole time. I think that actually we've been benefiting from a lot of the more technical involvement because it's always kind of been the case that if there's a CTO involved, we more easily differentiate from, you know, the likes of Salesforce and Adobe as an example because our technical sophistication is better, like more strongly appreciated. Having more technical stakeholders in buyer processes, certainly it's like there are some downsides to just having more stakeholders. There's more complexity. Sometimes they take more time, etc. When there's technical voices in the room, the benefits of the way that Braze is both architected from an API perspective, the composability of Braze's capabilities from a data perspective, the partner integrations that we have, the way that we integrate into not just the kind of over-the-top messaging channels, but also into the product interfaces, these are all places where we've got great strengths. I think as well, a lot of the zeitgeist around AI has made it non-negotiable for you to be a technical, you know, everything. As a marketer, I think that Braze in the past has sometimes not benefited from being more technically sophisticated because people have maybe felt that they are not in a position to kind of take advantage of it. I think it's pretty non-negotiable in everyone's jobs right now that you need to really lean into becoming a more technical, more AI-savvy practitioner of whatever it is that your craft is. That means that the Braze customer base, we see people investing more in educating themselves on how to use these more technical capabilities. We also do see some other benefits where the rise of vibe coding means that there's more and more people that are confident being able to use some of our more technical features. Things like Braze Canvas have actually always been vibe coding adjacent because they're visual programming languages that allow for people that don't have a traditional computer science background to be able to do programming. I think that, you know, the more that kind of the zeitgeist around just everyone having comfort engaging with, you know, more advanced automation, more advanced technical tools, things like MCP servers and vibe coding and what have you, I think all of those mean that the differentiation that Braze, you know, spent a lot of time and design energy, we put a lot of investment in being differentiated in our category on these dimensions of technical sophistication. In some cases in the past, that wasn't as appreciated or wasn't as accessible. The direction of travel on that is really positive as a result of a lot of these AI advances. Right. As you think about your own product roadmap, last year you sort of introduced the concept, I think at least, of Project Catalyst and kind of adding some more embedded AI capabilities in the platform. Can you give us an update on how that's going and kind of the uptake you're expecting? Yeah, for sure. When we look at, you heard me mention this earlier, but when we look at both Project Catalyst as well as the OfferFit acquisition, these are both decisioning products. We're going to be sharing more at Forge about this, but definitely really excited by the potential of bringing together the roadmaps of both the Braze AI teams as well as OfferFit, really looking at the decisioning space. I shared this earlier this year, but the approach that we're taking is to provide a broad spectrum of decisioning products. You should expect to see Project Catalyst really evolving into the side of that spectrum where these are rapidly deployable decisioning products able to do optimizations around content in an autonomous way in order to drive better performance. Really staying focused on rapid time to value, the ability to quickly set them up, incorporate those decisioning primitives into your existing Canvases. That provides, I think, a really great hybrid approach where you've got deterministic automation out of the visual programming language that Canvas has historically represented. You augment that with more and more autonomous AI products that you're infusing with the intelligence and creativity of your brand and your marketing strategy and what have you. You heard me speak about composable intelligence a little bit on the earnings call. We're really excited to be really building around that ethos where, effectively, if you go back a year ago, we were certainly excited about a lot of the capabilities to improve marketer productivity. We still are, being able to provide assistance and other sorts of Gen AI helpers to help marketers more quickly produce content, test out different variants, be able to do things like automated copy editing and translation, and be able to automatically produce things like liquid personalization or SQL or what have you. We're still excited about a lot of that. We're now zooming out from that. We are saying, you know, how does a marketing team and a brand and organization actually imbue these units of intelligence around models, agents, and operators with the creativity and the business strategy and the priorities of their brand, of their brand voice, of their product ecosystem, or their product offerings, et cetera, and then be able to flexibly and dynamically plug those into different strategies. When we look at something like content decisioning, the ability to use composable intelligence to be able to say, OK, over time, my marketing team has actually been imbuing these generative models or agents and operators with an understanding of who our brand is, what we stand for, what our business priorities are, what the guardrails are to be able to have observability around that and really build that up as an intelligent asset that understands the context of your business and then be able to use composability around that intelligence to plug it into the strategies that you're running that in some cases might be still using deterministic automation because that's where the scale and the performance and the unit costs demand that. Other places might be running, invoking LLMs at every step of the decision-making in order to have an interactive conversation with someone. When you look at the scale of sending a trillion push notifications in a year, you're probably not going to want to invoke a huge token cost on every single one of those trillion push notifications. Every single WhatsApp message that you send to someone, you're paying Meta quite a bit for those. To be able to optimize the relevance around those by invoking more intelligence at each interaction point with the customer is absolutely worth it from a marginal cost perspective. I think that we are also looking at a wide swath of use cases across the customer engagement space and saying that we need to have an ability to be able to plug in decisioning as well as more reasoning and intelligence capability in a way that's flexible and dynamic. The idea of composable intelligence and being able to imbue, you know, the models that you then drive agents and operators with, with the intelligence of your organization and your marketing teams over time, and then deploy those flexibly and dynamically in your customer engagement strategies is, I think, a really exciting future for our space, one that we're really leaned into and executing on right now. We'll have more to share about that at Forge later this month. All right. Looking forward to that. I think we have about five seconds left. It's probably a good place to end. Bill, Isabelle, thank you so much for joining, especially right after earnings. Appreciate everyone for filling out the room here. Yeah, absolutely. Thanks, everybody.