Braze Inc

NASDAQ:BRZE

Earnings Call Analysis

Strong Q3 Growth Amid Economic Challenges

In a commendable third quarter, revenue soared by 33% year-over-year to $124 million, bolstered by the North Star acquisition and strong subscription growth, contributing 95% to total revenue. Customer base expanded to 2,011, a 17% increase, with large customers spending over $500,000 growing by 28%. Non-GAAP gross margin improved by 170 basis points to 71.4% through efficiencies and technology optimization. However, the company faces macroeconomic headwinds leading to cautious Q4 revenue guidance at $124-125 million (26% growth). The full year revenue is projected to reach $465-466 million, around 31% growth, despite an expected operating loss of $39.5-40.5 million.

Braze's Innovation and Rapid Growth

Braze demonstrates its innovative edge with the development of AI-driven tools aimed at enhancing marketing agility and prompting creative risk-taking for their customers. Their AI recommendation engine and predictive models, along with a robust language model canvas step built on advanced AI like GPT-4 Turbo, exemplify their commitment to pushing the boundaries of what's possible in customer engagement. These advancements empower marketers to launch campaigns with greater efficiency, thereby promising increased marketer velocity.

Impressive Financial Performance and Customer Growth

Financially, Braze's third-quarter revenue soared by 33% year-over-year, reaching $124 million, bolstered by both organic growth and contributions from the North Star acquisition. Subscription revenue continues to fuel the company's financial engine, comprising 95% of total revenue. The customer base has expanded to 2,011, marking a 17% year-over-year increase, with significant growth among large customers (spending at least $500,000 annually) who now contribute 58% to total annual recurring revenue. Revenue from outside the U.S. accounted for 44%, indicating a strong global presence. Operational efficiency improvements led to a non-GAAP gross margin increase, and while the company still operates at a loss, losses have narrowed when compared to the previous year.

Guidance and Future Expectations

Looking ahead, Braze anticipates a fiscal year 2024 non-GAAP net loss per share between $0.26 to $0.27. Despite experiencing macroeconomic headwinds, the vision is optimistic with a goal to achieve positive quarterly non-GAAP operating income and positive quarterly free cash flow by the end of fiscal year 2025. This forward-looking strategy is a promising sign that the company is not only focused on growth but also on achieving profitability in the longer term.

Performance Amidst Economic Headwinds

Despite a challenging macroeconomic environment, Braze has effectively navigated the current conditions, as evidenced by exceeding Q3 revenue expectations. With sales cycles returning to more normalized linearity, the company has shown resilience and adaptability. While the economy's uncertainty does impact guidance and long-term forecasting, Braze has managed to report positive financial momentum, attributed in part to large enterprise wins and sustained execution, even during a period that saw many companies tightening their belts.

Focus on Efficiency and Consolidation Trends

Braze's leadership acknowledges the importance of operational efficiency, particularly when market conditions are less than ideal. They believe their recent enterprise gains reflect their advantages in what has been a consolidation-heavy period for the tech industry. Enterprises have shown appetite for reducing complexity in their technological ecosystems, thus seeking solutions that Braze provides. This trend towards consolidation is seen as a strategic approach to effectively manage total technology ownership costs and to enhance organizational agility.

Earnings Call Transcript 2024-Q3

[Operator]

Welcome to the Braze's Third Quarter Fiscal Year 2024 Earnings Conference Call. My name is Christine, and I'll be your operator for today's call. '[Operator Instructions]'. I'll now turn the call over to Christopher Ferris, Head of Braze's Investor Relations.

[Christopher Ferris, executive]

Thank you, Operator. Good afternoon, and thank you for joining us today to review Braze's results for the fiscal third quarter 2024.I'm joined by our Co-Founder and Chief Executive Officer, Bill Magnuson; and our Chief Financial Officer, Isabelle Winkles. We announced our results in a press release issued after the market closed today. Please refer to the Investor Relations section of our website at investors.braze.com for more information and a supplemental presentation related to today's earnings announcement.During this call, we will make statements related to our business that are forward-looking under federal securities laws and the 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 fourth quarter and the fiscal year ended January 31, 2024, and the fiscal year ended January 31, 2025, our planned product and feature development and the benefits to us and our customers there from, including our AI features, the potential impact and duration of current macroeconomic trends, our anticipated customer behaviors, including vendor consolidation trends and their impact on Braze, the anticipated benefits of our partnerships, the expected effects of our social impact initiatives and our long-term financial targets and goals, including the anticipated period in which we may generate positive non-GAAP operating income and positive free cash flow. 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. We assume no obligation to update any such forward-looking statements.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 Investor Relations 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 third quarter 2024 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 section 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.

[William Magnuson, executive]

Thank you, Chris, and good afternoon, everyone. We delivered another strong quarter, generating $124 million in revenue, up 33% versus the prior year despite a macroeconomic environment that remains challenging.Our execution was strong, and we continue to drive operating efficiency in the business, improving non-GAAP gross margin by 170 basis points year-over-year and non-GAAP operating margin by over 1,100 basis points compared to the third quarter of last year.We were pleased with the strength of our enterprise business, the continued rapid pace of R&D and the resulting customer excitement about new product launches and announcements as well as the continued expansion of the global Braze partner and customer ecosystem.In October, we also hosted Forge, our annual flagship Customer Conference, which brought together leading marketing growth and engagement teams to learn best practices for delivering brilliant customer experiences, including incredible stage sessions from brands, including Activision Blizzard, e.l.f. Cosmetics, McDonald's, The Walt Disney Company and Wise Labs.It was an inspiring capstone for what has been an exciting year for Braze's own global events, including the newly introduced City x City series. In total, we hosted events across 21 major global cities and welcomed nearly 4,000 attendees through our doors.Looking ahead into next year, we're already excited to be hosting Forge again in the U.S. and bringing City x City to 5 continents as our customer community and partner ecosystem continues to prosper.Across our global footprint, Braze is scaled by methodically building a customer base across a wide array of industry verticals, business models and company sizes. And today, I'm proud to announce that during the month of November, we passed $500 million of committed annual recurring revenue, nearly doubling since our IPO just over 2 years ago.A huge thank you to our dedicated team across the globe who helped us achieve this milestone. I'm excited to keep building on this success with you as we continue on our journey to make Braze the standard for customer engagement.Brands continue to recognize the significant ROI that can be achieved through personalized cross-channel customer engagement enabled by the Braze platform. New business wins and upsells included FabFitFun, Mythical Games, Ouro, (formerly Netspend), Papa John's U.K. and Sonos, among others. Enterprise new business was strong as we continued to capitalize on the legacy vendor replacement cycle and the consolidation trend that we've highlighted in prior quarters. During the quarter, we added to our growing list of major QSR customers with a competitive takeaway from a legacy Marketing Cloud. And we're excited to consolidate away a number of other vendors as we begin work with the top news organization looking to simplify their complex technology ecosystem and drive better outcomes for their customers through higher quality engagement.We are also continuing to win against both startup competitors and legacy point solutions as they struggle to deliver high-quality customer engagement seamlessly coordinated across the many channels that matter to the modern B2C marketer.We are excited by our competitive position amongst the category of customer engagement, especially as we reflect on what hasn't changed in our space. And that's the top brands continue to invest heavily in order to deliver increased value and relevance to their consumers, both by understanding the real-time context that surrounds every marketing and product interaction and by leveraging their growing first-party data assets to harness the gains available from real-time stream processing, combined with AI-driven orchestration and personalization. As marketers start the course of their business goals and customer engagement initiatives in our visual canvas environment, they can increasingly rely on AI, ML and other forms of automated decision-making to manage the complexity of the modern customer engagement environment while delivering relevance and personalization to their customers at scale.While the macro environment remains uncertain as we head into next year, we are confident that customer engagement will remain a business imperative for brands. In tough times, brands shift their focus to high-return initiatives like life cycle optimization and retention. And to stand out, marketers need powerful customer engagement tools.Sophisticated brands continued to invest in their customer engagement efforts, finding opportunities to initiate new relationships efficiently and strengthening those bonds over time by staying relevant in their customers' lives and delivering value in critical moments. Especially as consumers continue navigating an environment with high interest rates and inflation, the period from Black Friday to Cyber Monday was a particularly important time for brands to break through the early none of the holiday season and stand out in their customers' minds.At Braze's, this year, again saw record-breaking sand volumes as we sent over 37 billion messages in the 4-day period from Black Friday through Cyber Monday. More importantly, we also saw increases in the sophistication of messages, campaigns and canvases. On Black Friday alone, we processed nearly 25 billion in pound API calls. And during that day's peak activity periods, our outbound packet throughput more than doubled compared to last year. That rise was driven by more centime API calls and advanced personalization being used by more customers.Brands also leaned further into cross-channel messaging this year with Braze supporting a wide array of established and emerging messaging channels, including significant increases in the use of WhatsApp, email, SMS, MMS, content cards, Roku messages and Web push.Zooming out to the orchestration layer, we saw a 67% increase in messages sent using Canvas, our visual development environment, which reflects how marketers are orchestrating multistep cross-channel messaging flows and relying on differentiated brace capabilities during this critical time.In order to stay on the leading edge of customer engagement, we are relentlessly focused on product innovation that can accelerate the legacy replacement cycle and compel more brands to upgrade their customer engagement. At Forge, we unveiled new low-code and AI-driven product innovations designed to more effectively personalize brands customer engagement efforts and drive more agile and productive marketing teams.We are always looking for ways to allow our customers to test and iterate more quickly on customer experience, both in and outside of their products. Building on the strong in-product foundation provided by our SDKs, we were excited to promote Feature Flags to general availability in October.Feature Flags allows marketers to quickly launch, test and optimize features on mobile apps or websites, providing flexibility to test varying expressions of their product and promoting an agile and experimental method of product delivery that results in better experiences for customers.These types of experiments are particularly impactful when coordinated with customer messaging and optimized by the AI and testing features native to Canvas. One brand putting this all into action is a mobilae, a leading player in the EU real estate industry, who used Feature Flags to test the release of dark mode to a segment of customers who are very active in the evening.After turning on dark mode for that segment and targeting those same users with an innate message about the new feature, they allowed the test users to experiment for 2 weeks and then subsequently collected qualitative feedback from them via an in-app survey. After validating both the survey feedback and the conversion data, mobilae gradually extended the feature to all of their registered users. Normally, a launch like this would have required multiple platforms and complex cross-team coordination.By bringing complementary product and messaging workflows together, one person coordinated this entire launch in Braze and did it in half the time of similar past experiments. At Forge, we also announced several tools in development that we anticipate adding to our Sage AI suite, including an AI recommendation engine that is designed to use machine learning to match relevant items from brace catalogs with customers most likely to buy them.The addition of a large language model or LLM Canvas step to our visual programming language and channel-specific message content recommendations paired with performance prediction. The Canvas LLM step uses Gen AI to interpret user-provided input, such as survey feedback or reply to a what type conversation and then provides a contextual response that can be tabulated into subsequent Canvas actions or message steps.We are actively testing multiple underlying models for this LLM step, including our own custom trade models built on top of Llama 2 as well as open AI hosted models such as GPT-4 Turbo. Extending on our experimentation with custom trained models, we are also very excited by our work in channel-specific message content recommendations paired with a growing ability to automatically predict which variants are likely to perform best using custom train predictive transformer models.By providing these predictions before launching a Canvas or campaign, we intend to further increase marketer velocity, encourage more creative risk-taking and free up time that can be spent on further experimentation with deeper personalization techniques. This is just a small portion of our exciting AI-related product road map, which we are designing to push the boundaries to deliver the most personalized brand experiences for our customers.As the legacy clouds continue to be held back by antiquated architectures and decades of unpaid complexity debt, we believe our modern foundations, combined with a relentless focus on innovation will accelerate the legacy replacement cycle and compel more brands to upgrade their customer engagement strategies with the Braze platform. As we zoom out and look at our broader ecosystem, I'm also excited to share an update on our strengthening relationship with AWS. Just last week, we shared Braze's achievement of AWS advertising and marketing technology competency in the category of digital customer experience. And in October, we announced the availability of Braze through the AWS marketplace. These recent announcements build on our broader partnership, which includes AWS retail competency, travel and hospitality competency and digital customer experience competency.We look forward to growing our relationship with Amazon and other partners as we improve the depth and capabilities of our solutions. Before turning the call over to Isabelle, I'd like to update you on our latest social impact initiative, Tech For an Equitable Future announced just yesterday. This program aims to remove barriers for underrepresented founders by providing introductory free access to the Braze platform.We are also excited to share that Braze recently made our first commitment to a virtual power purchase agreement, an important step for our overall climate commitment, and we look forward to sharing more climate-related updates next year.Thank you to all our stakeholders for your continued interest in Braze. We are excited about our future, meeting customers where they are on their customer journey and empowering them to achieve world-class customer engagement while delivering efficient growth at scale for our shareholders.We look forward to continuing this journey to becoming the de facto standard for customer engagement with you in the coming months and years. And now, I'll turn the call over to Isabelle.

[Isabelle Winkles, executive]

Thank you, Bill, and thank you, everyone, for joining us today. As Bill stated, we reported a strong third quarter with revenue up 33% year-over-year to $124 million, which includes an approximately $3.5 million contribution from our North Star acquisition, which closed on June 1 of this year.Growth was driven by a combination of existing customer contract expansions, renewals and new business. Our subscription revenue remains the primary component of our total top line, contributing 95% of our third quarter revenue. The remaining 5% represents a combination of recurring professional services and onetime configuration and onboarding fees.Total customer count increased 17% year-over-year to 2,011 customers as of October 31, up $296 from the same period last year and up 53% from the prior quarter. Our total number of large customers, which we define as those spending at least $500,000 annually, grew 28% year-over-year to 189. And as of October 31, contributed 58% to our total ARR. This compares to a 56% contribution as of the same quarter last year. Measured across all customers, dollar-based net retention was 118%, while dollar-based net retention for our large customers was 121%. Expansion was again broadly distributed across industries and geographic regions.Revenue outside the U.S. contributed 44% of our total revenue in the third quarter compared to 43% in the prior year quarter and 43% in the second quarter of this year. In the third quarter, our total remaining performance obligation was $560 million, up 37% year-over-year and up 7% sequentially.The current RPO was $370 million, up 31% year-over-year and up 5% sequentially. The year-over-year increases were driven by contract renewals and upsells and the signing of new customer contracts.Overall, dollar-weighted contract length remains at approximately 2 years. The North Star acquisition contributed approximately 3 percentage points of year-over-year CRPO growth, and we will lap the impact of this acquisition on June 1 of FY '25.Non-GAAP gross profit in the quarter was $88.5 million, representing a non-GAAP gross margin of 71.4%. This compares to a non-GAAP gross profit of $64.9 million, a non-GAAP gross margin of 69.7% in the third quarter of last year. The 170 basis point year-over-year margin improvement was driven by ongoing personnel efficiencies and the continued cost optimization of our technology stack. Non-GAAP sales and marketing expense was $58.3 million or 47% of revenue compared to $46.2 million or 50% of revenue in the prior year quarter. While the dollar increase reflects our year-over-year investment in headcount costs to support our ongoing growth and global expansion, the improved efficiency reflects our disciplined investment approach to resource deployment across our go-to-market organization.Non-GAAP R&D expense was $20.2 million or 16% of revenue compared to $17.5 million or 19% of revenue in the prior year quarter. The dollar increase was primarily driven by increased headcount costs to support the expansion of our existing offerings as well as to develop new products and features to drive growth.Non-GAAP G&A expense was $19 million or 15% of revenue compared to $18.6 million or 20% of revenue in the prior year quarter. The dollar increase was driven by investments to support our overall company growth, including headcount costs and increases in software subscription and licenses. Non-GAAP operating loss was $8.9 million compared to a non-GAAP operating loss of $17.3 million in the prior year quarter. Non-GAAP net loss attributable to Braze's shareholders in the quarter was $4.5 million or a loss of $0.05 per share compared to a loss of $13.8 million or a loss of $0.15 per share in the prior year quarter.Now, turning to the balance sheet and cash flow statement. We ended the quarter with $471.9 million in cash, cash equivalents, restricted cash and marketable securities. Cash used in operations during the quarter was $2 million compared to $23.9 million in the prior year quarter, including the cash impact of capitalized costs, free cash flow was negative $5.9 million compared to negative free cash flow of $28.1 million in the prior year quarter.As we have stated before, we expect our free cash flow to fluctuate from quarter-to-quarter given timing of customer and vendor payments. And now turning to our forecast. Demand for customer engagement solutions is solid. Our team's execution has been strong, and our pipeline remains healthy. However, we continue to experience macroeconomic headwinds that manifest in elongated sales cycles, constrained marketing budgets and slower new business growth. We approach our guidance with a prudent and risk-adjusted methodology and assume current macroeconomic conditions remain unchanged going forward.For the fourth quarter, we expect revenue to be in the range of $124 million to $125 million, which represents a year-over-year growth rate of approximately 26% at the midpoint. While we're not providing specific gross margin guidance, we expect gross margin will be negatively impacted by higher seasonal activity during the fourth quarter.As a reminder, our long-term non-GAAP gross margin forecast is 67% to 72%. Fourth quarter non-GAAP operating loss is expected to be in the range of $7 million to $8 million. At the midpoint, this implies an operating margin of approximately negative 6%, an improvement compared to the better than negative 7% guide that we had provided earlier this year.Fourth quarter non-GAAP net loss is expected to be $4.5 million to $5.5 million and fourth quarter non-GAAP net loss per share in the range of $0.04 to $0.05 per share based on approximately 99 million weighted average basic shares outstanding during the period.For the full fiscal year 2024, we expect total revenue to be in the range of $465 million to $466 million, which represents a year-over-year growth rate of approximately 31% at the midpoint. This includes an estimated $9 million in-year contribution from North Star or approximately 2.5 percentage points of growth over FY '23, which, once again, we will lap on June 1 of this year.Fiscal year 2024 non-GAAP operating loss is expected to be in the range of $39.5 million to $40.5 million. Non-GAAP net loss for the same period is expected to be in the range of $25.5 million to $26.5 million.Fiscal year 2024 non-GAAP net loss per share is expected to be $0.26 to $0.27 per share based on a full year weighted average basic share count of approximately 98 million shares. In addition, we believe we are on track to meet the profitability goals we have previously communicated for fiscal 2025. We expect Braze will achieve positive quarterly non-GAAP operating income and positive quarterly free cash flow by the end of fiscal year ended January 31, 2025.I'll wrap my remarks by reiterating our commitment to driving product innovation while consistently executing against our financial targets. We remain confident in our ability to grow our top line while maintaining cost discipline and delivering on the financial targets that we have set for fiscal 2025.And with that, we'll now open the call for questions. Operator, please begin the Q&A.

[Operator]

'[Operator Instructions]'. Our first question comes from Arjun Bhatia with William Blair.

[Arjun Bhatia, analyst]

Thank you guys and congrats on a great quarter here. If I could just start with new customer demand, it seems like, Bill, you called out some competitive takeaways and strong traction in general, but I did notice that the net new customer adds slowed a little bit. So can you just talk about what's happening with deal sizes and enterprise traction in new deals and how that pipeline might look going into Q4 here?

[Isabelle Winkles, executive]

Okay. Arjun, it's Isabelle. I'm just going to address specifically your question on the net new customer adds. Actually, where we're seeing kind of more challenges is down at the SMB segment, and that's on sort of 2 fronts. One is the new customer adds and our ability to kind of get new logos in that segment. And then also, some challenges, obviously, from a loss perspective, logo loss in that segment.That segment of the market is really experiencing kind of the toughest environment in terms of access to capital and liquidity, ability to kind of spend out their budgets, and we're seeing more business failures down at that level. But we are rest assured, it's not really a competitive issue. Net competitive flows were actually positive to Braze during the quarter.So, we're very happy in terms of how we're behaving and realizing our reward during the quarter relative to the competitive environment. It's really what you're seeing, is more a reaction of elements happening at the SMB level. I would also note that while we saw more elevated losses of logos at the SMB level, the dollar level was relatively low in that segment specifically. And overall, the dollars of loss in the quarter was well within our sort of budget tolerances. So, this was not unexpected.

[William Magnuson, executive]

Yes. And as we mentioned, we are seeing relative strength in the enterprise. And we think that's primarily because enterprises are used to planning and operating on longer time horizons. They operate with more stable foundations. And those are the key decision-making ingredients that drive both the legacy replacement cycle and the vendor consolidation trends.And we're seeing those factors play out in our favor, even as budgets have remained constrained and efficiency is being prioritized over growth in most of those companies. However, it's definitely still an opportunity constrained environment, and those sentiments don't exist across our entire addressable market, which really just brings us back to the imperative for us to continue executing the strength and investing in the underlying improvements that in our own efficiency and our own productivity and our own velocity so that we can continue to grow even as the macro persists.

[Arjun Bhatia, analyst]

And then when we think about some of the Black Friday, Cyber Monday trends, it looks very strong, obviously, through the consumption was pretty robust this year. What does that mean for Braze customers longer term like especially as we think about our customers coming up with renewals, should that be an indicator of upsell? And, Isabelle, I think you touched on this a little bit, but I assume that is the gross margin impact that you're talking about, where it may not be an immediate bump to revenue, but you're recognizing the costs in Q4?

[Isabelle Winkles, executive]

That's exactly right. Revenue is recognized ratably over the contract term, whereas the cost component is definitely based on utilization and usage. So, that's the compression that you see in Q4.

[William Magnuson, executive]

Yes. And I would say that you shouldn't see that as a forward indicator of consumption-based upsells because marketers certainly planned for Black Friday, Cyber Monday to be higher volume, and that is incorporated into their purchasing.However, I do take it as a positive indicator that the increased usage of Canvas in particular, as well as our more advanced features means that a broader and broader percentage of our customer base is utilizing the parts of Brazes that are differentiated and that drive differentiated value. And we know that customers that use Canvas are stickier and they drive more value from Braze.We have less competitors when a customer is more sophisticated and we maintain our premium price point much more easily in those circumstances. And so, that's why we're so focused on continuing to drive that more differentiated and more sophisticated usage. And I think that some of the non-volume stats that you saw on our Black Friday, Cyber Monday readout were very much in support of that.

[Operator]

Our next question comes from Brent Bracelin.

[Isabelle Winkles, executive]

Brent we can't hear you if you are talking. I think maybe we're going to go to the next question, Operator.

[Operator]

Our next question will come from Ryan MacWilliams with Barclays.

[Ryan MacWilliams, analyst]

Great to see the CRPO growth improvement. Bill, how are your existing enterprise customers broadly thinking about next year's pledges at this point? Like are you seeing customers more willing to make growth investments after being maybe more profitably focused in the last year?

[William Magnuson, executive]

Yes. I mean I would say with what we're experiencing right now, we don't have reason to believe that the macro impacts in the buying environment are going to meaningfully change through next year.Marketing budgets and team sizes are still flat or otherwise constrained. CFOs are still scrutinizing every dollar that goes out the door. And we also see many businesses still struggling to adapt to the new macro.In the SMB segment, I know it wasn't your question, but many of them are also watching the runway shrink month-over-month, waiting for the BC environment to normalize a bit more, which so far has not really happened. And so, we've been really happy with the execution of the team. We're controlling what we can.We're very happy with the creativity, dedication and innovation from the Global Braze team, but we're not anticipating an improvement in the buyer environment. As I mentioned before, we still consider it to be an opportunity constrained environment. But we're doing everything we can to control what we can to execute as well as we can.And we're doing it at the same time that we're making foundational investments both in the product in our efficiency and our velocity and our plan is to be far ahead of the competition on all of those fundamentals when conditions eventually do loosen up again.

[Ryan MacWilliams, analyst]

And just on the holiday traffic, we saw a continued share shift towards mobile purchasing during the Cyber Week and Black Friday period. This is a trend that Braze was built on, and you guys have been planning for a long time. But just given like that sniffing gain, I think that was bigger than people expected. Do you think this can finally maybe wake up some more non-multiple first enterprises or customers outside your traditional target zones that could engage with Braze going forward?

[William Magnuson, executive]

Yes, absolutely. When I think that it's not just the mobile side of it, waking them up to the opportunity that exists in mobile, and that is obviously a strength for Braze, but it's also another reason for more brands to break down the silos that exist between their teams. We see, in particular, in the traditional enterprise, especially in some of the slower-moving categories that there are still huge silos and walls up between the e-mail teams, the web teams, the mobile teams. And that's something that we saw play out over the course of the last 5 or 6 years and some of the faster-moving categories and in some of the digital-first businesses that really broke down those walls.They started to focus on the more coherent cross-channel experience delivery instead of just delivering messages in silos. And those are kind of strategy and organizational shifts that really play into Braze's favor. And so I think more than just the shift to mobile and obviously Braze's mobile strength is really that focus on cross channel execution, cross-channel orchestration and businesses evolving themselves to be more ideal customers of Braze.

[Operator]

Our next question comes from Taylor McGinnis with UBS.

[Taylor McGinnis, analyst]

Isabelle, maybe for you, if we look at CRPO growth quarter-over-quarter, excluding North Star, it seems to be trending similar to sequential growth that we saw last year. So just as we look into 4Q, any differences in the renewal base this 4Q versus last year because some of the recent trends that we're seeing in sequential growth hold? And just given that this is such a big bookings quarter for you guys. I'm curious what you're seeing so far in terms of ideal activity and renewal conversations.

[Isabelle Winkles, executive]

Yes. So, I'll address your question about North Star first on the sequential. So, the North Star impact, I would think about that more as impacting the year-over-year versus the sequential because once it's in the number, it's in it, right, and it just sort of persists and then we'll lap it June 1 of next year.So, I would look at actually, if you look at the sequential, that's not really impacted by North Star specifically. So think of that as kind of a more normalized outlook on the company. What we're seeing in terms of Q4, there are more renewal dollars to happen in Q4. That's fairly typical.And so, we do have that for Q4. And what we're seeing in terms of bookings so far, we've talked about linearity this year being better than expected. And when I say better than expected, it just means it's sort of returning to levels or trends that were consistent before the market sort of fell apart about 18 months ago. And I broadly expect to actually see that in Q4 of this year as well.

[Operator]

Our next question comes from Tyler Radke with Citi.

[Tyler Radke, analyst]

So I wanted to double-click on the enterprise strength that you saw in the quarter, pretty big pickup in 500,000 additions. Can you talk to the trends that you're seeing there? Is this primarily sales force displacements? Is this just success with upsells? Just help us understand what's driving the strength there or if there was any timing in terms of pulling deals out of Q4 as well?

[William Magnuson, executive]

Yes, I think when you look at the 500,000 cohort for Braze, just a reminder that new business can enter that right out of the gate, but also we can achieve that through upselling smaller logos into that category over time. And so, certainly, both of those things are at play in the sequential growth in that number.I think across the enterprise, as I articulated earlier, we're seeing both the legacy replacement cycle at work. I think that as Braze's awareness and our prominence and some of the pressure on these enterprises to really transform themselves to stay more competitive in markets where many of them are experiencing challenges from digital-first companies, and they're looking at how those digital-first companies operate. And the answer in many of those cases is that they use Braze, right? Or they operate with the agility that only Braze can deliver, especially when you're trying to coordinate across the complex challenges of cross-channel customer engagement and delivering to global audiences, which more and more businesses are doing these days. It's not just the Fortune 500 that needs to tackle the complexity of the global environment. It's also a lot of digital first start-ups that take advantage of the app stores in order to have that reach. And so, Braze, I think is well positioned for those changes in the environment, and we're doing everything we can to be able to execute even as those businesses are facing constrained budgets and teams that are driving toward efficiency.Another part goes back to the -- something I've mentioned for probably 5 or 6 quarters now, which is just that during times where brands are focused on efficiency, working on retention, leveraging first-party relationships and first-party data assets and ensuring that you're retaining the customers that you've spent a lot to acquire in the first place at higher and higher rates is the utmost importance.And there's an opportunity to focus on that once acquisition gets a little bit more deemphasized as it has through these macro conditions. And so, it's a little bit of a lot of those different things, but it's still uneven in terms of how we're seeing enterprises lean into new investments. There's still a lot of penny pension going on. There's a lot of scrutiny on every dollar. We're certainly seeing, and we've spoken about this before, a more stable environment this year than we did in the back half of last year. But I wouldn't say that we've seen any sort of material improvement from Q1 to Q3 through this year. It's very much a lot of enterprises living in the same budget realities as they have the same kind of team sizes they have, the same push for efficiency throughout the entire year.We don't see strong evidence that those factors are going to change in the near term. We're certainly on the lookout for them because, as I mentioned before, as the environment loosens up again, we want to be far ahead of the competition and leveraging that great execution that we have to get even further out ahead. But we are seeing that strength in the enterprise right now and we're adapting accordingly.

[Tyler Radke, analyst]

And just on the environment, maybe this is for Isabelle, but if I look at your revenue beat, this was one of the strongest you've had all year. And I think last quarter, you benefited from linearity and the North Star acquisition this quarter that was already in the numbers. And then you also raised Q4, Q4 was guided $5 million above the street, which was stronger than the guidance you gave last quarter.So it feels like you're actually flowing through some operational upside, I guess. What was the biggest driver of that upside in the quarter? Was it kind of these larger enterprise wins? Or maybe did the environment play out a little bit better than you were expecting in terms of macro impacts?

[Isabelle Winkles, executive]

Yes. So, the macro continues to be challenging. I think we're executing well in the context of this macro. In Q3, yes, there was definitely, when I say impacts from linearity, again, not better than normal, but we haven't been normal for a long time. So we're kind of back to a more normalized linearity, which is helpful relative to if you even rewind the clock back to kind of the beginning of the year and how we set out guidance, North Star wasn't in there.We were baking in quite a bit of kind of back-end loaded deal flow in the context of quarter-over-quarter. So while yes, that we've now had the benefit of a few quarters of that. And so I could take some of that into consideration in the context of the new guides with the uncertainty that continues to plague us, I don't take all of that into consideration.And so, you are seeing some of the upside here. It's been 2.5 quarters of some of this better linearity here. We will continue to take a risk-adjusted approach as we forecast out further into the future, and I would suggest the analyst teams do the same thing.

[Operator]

Our next question will come from Brent Bracelin with Piper Sandler.

[Brent Bracelin, analyst]

Bill, I wanted to go back to the replacement cycle. You did mention several vendor consolidation deals in the quarter. Do you get any sense of an increasing appetite with some of these large enterprises that they're now maybe more willing to look at consolidation than they were maybe 2 years ago? And if so, maybe why? And then one quick follow-up for Isabelle.

[William Magnuson, executive]

Yes. I think that there's a couple of things from a consolidation standpoint. One is that the pace of a lot of businesses slowed a little bit, right? There was a breakneck pace through the highly expansionary period that led into the end of 2021, and that led to a lot of software getting deployed in a lot of places.As we're all aware, a lot of that software was utilized to different levels of effectiveness, and I think that there's just a lot of scrutiny being placed on what are, in many businesses, super complex technology environments. And so, picking the ability to kind of pick your head up, plan in this environment that is relatively calmer than it was when you assembled the complexity and be able to look for, the ability to consolidate effectively is really part of what drives that attitudinally.And then from a financial perspective, I think that the total cost of ownership of a complex technology landscape because of the number of people that are required to manage it, the amount of overhead that goes into play with communication across all the different tools and coordination there. In the example that I cited in the prepared remarks of a customer being able to use a combination of Feature Flags in product surveys and reporting on an experiment that they rolled out all as a single person in the same tool. If you think about how that translates into organizational productivity and agility and what that means from a total cost of ownership and savings perspective, those are all aspects of consolidation that are really pointed in the direction of efficiency.And so, when you combine those 2 things together, I think that creates a good environment where both attitudinally people are open to taking another look at what got assembled while they were going through that period leading into late 2021. And there's just a lot of great rationale to simplifying an ecosystem, especially when you have as many moving parts in some of these marketing technology ecosystems as we see at some of these prospects.

[Brent Bracelin, analyst]

And then just, Isabelle, on the demand environment, 3 straight quarters of 30% plus growth. I get budgets remain constrained. I get there's a little bit of acquisition benefit there, but 3/4 do make a trend. Do you feel like the environment is at least stable enough in a demand perspective for you to continue to kind of control what you can control? Or would you say there's still some outliers that we should be aware of?

[Isabelle Winkles, executive]

Yes. So, I wouldn't point to any specific outliers that we should be aware of, but there is just continued uncertainty just generally in the market. And so I said 2 quarters is not a trend make. Yes, it's been 3 quarters. Yes, there are tailwinds from the North Star acquisition. So we are going to continue to be prudent on the profitability side. Some of these overachieves, we have actually opened up some additional spend capacity, particularly in R&D. That is a longer-term play for us, obviously. But we are trying to take some of this benefit and kind of reinvest in the business in ways that are going to pay out dividends over the longer term.

[Operator]

Our next question comes from Brian Peterson with Raymond James.

[Jonathan McCarrey, analyst]

This is Jonathan McCarrey on for Brian. I'm curious going off for Forge. How did that event perform versus expectations in terms of pipeline generation? And then maybe give us some context in terms of what the conversations have been like around the new product and the future announcements you had there?

[William Magnuson, executive]

Yes, absolutely. So, as I mentioned, Forge was actually a capstone on a full year of owned events, and we've been happy with how that's been able to activate our global customer community. The goals of these events vary depending on the event series, and Forge is really the flagship customer event where we bring in primarily existing customers. We do a lot of certifications.Our partnership landscape is on display. There's a lot of learning. That can really help with deal acceleration, and it can help cement relationships and improve the sophistication. We don't look for that to specifically create a lot of net new pipeline or City x City and kind of get real with Braze and grow with Braze event series that make up the rest of those that I cited in the prepared remarks, are more oriented towards prospects and new business pipeline generation. And those have a steady drumbeat on their schedule throughout the year.With respect to the conversations and what we're seeing in terms of customer excitement and trends, I think that AI continues to be the center point of a lot of that. And as I mentioned in the prepared remarks, in addition to working with OpenAI's proprietary models, we've also been doing our own training on a number of models, including on various sizes of raw material. And we've been really excited to see the results of those tests so far. We're excited about what that means both for copilots as well as around automated decision-making. We shared a bit at Forge, and we've shared some of the constituent components of Sage AI that we're ready to talk about right now, both with our customers as well as with all of you the through this earnings call. But there's a lot more that's underway across our teams.On the copilot side of the house, I think that the whole community is excited for this near-term future where GenAI and Braze is going to make it feel less like you're using a tool and more like you're working with frankly, a whole team of specialists and consultants to help you tackle your business challenges.We're thinking about this as being like having a brand strategist, a copy strategist, a developer and data analysts all close at hand and ready to improve and accelerate customer engagement initiatives for our customers. When we talk to a lot of people at Forge, there's a lot about operational efficiency. There's a lot about helping marketers do more with less. And I think that co-pilot features like this are particularly helpful on a platform like Braze where we can deliver differentiated capability to people, but only when they have certain technical and data skills when we're talking about various parts of the feature set.And when we can lower the barrier to entry to leverage those capabilities, people get really excited about that because it means that they can compound the kind of skills that they're acquiring in their own role along with new features that Braze continues to roll out.I think similarly, continued progress on GenAI and the creative production realm, it's going to make it easier to leverage Braze's experimentation capabilities. One of the key competitive differentiators about Braze versus many of our less sophisticated or lower-cost competitors has always been that we enable agility and we enable experimentation across all the different strategies that a marketer might run. But that's unfortunately not a way of working that all teams and businesses are resourced to take advantage of today. And so, we're excited and we heard a lot of conversations from customers that are experiencing with these new GenAI capabilities to lower cost of production to speed iteration cycles for new content and creative assets, and in doing so, we're excited that more companies are going to be able to work in a way that they find the advanced capabilities of Braze to be indispensable.And going back to the conversation on Black Friday, Cyber Monday and seeing more advanced features being used there, what that means is that there's more realized differentiation for Braze across a larger community of marketers because more of them are able to use our more sophisticated capabilities.

[Operator]

Our next question comes from Michael Berg with Wells Fargo.

[Michael Berg, analyst]

I wanted to ask something more philosophically in the market. You guys are very well positioned to leverage first-party data. And given the current macro and budget being constrained, it seems that there is an ongoing shift from paid advertising to platforms such as Braze. Can you talk about that trend as Braze that something that's real? And how does Braze potentially benefit from something like that?

[William Magnuson, executive]

Yes. So, this is something we've been talking about for a long time, which is that I think a lot of the focus and the dollars in marketing organizations were primarily an acquisition, which meant, in a lot of cases, performance marketing and advertising. And over time, we've seen that even as there's been a capability to use first-party data to make those strategies more efficient and more effective, that the internal silos that existed in a lot of marketing teams between the performance marketing and the CRM or the customer engagement teams, I just kept them from being able to utilize those.And so, going back to some of the analysis I just gave about what's driving vendor consolidation, I think part of this is a mindset, which is that in the kind of quest to get additional efficiency when there's more scrutiny and when these businesses are able to kind of slow down a little bit and rethink the way that they've been working, they realize that actually there's been this low-hanging fruit there for years now for them to be able to incorporate first-party data and to be able to incorporate first-party channels into their acquisition and their performance marketing strategies in order to drive additional efficiency.And so we've responded to that by increasing investment, especially over the last 12 to 18 months to make those integrations that we have into that ecosystem, more comprehensive and make them easier to use. That, in turn, has been then driving additional collaboration between the CRM and customer engagement teams with their performance marketing or their acquisition teams.We think that those are teams that should work in harmony over the long term, and it was really just needed to have a catalyst in order to make that happen. And so, we very much think that, that trend is real. I think that it's been happening for years now. There's definitely more focus on it as brands are pushing toward more efficiency, and it's something that we think is going to continue.

[Michael Berg, analyst]

And one quick follow-up. There's been a lot of discussion on the call around displacement of legacy vendors. It's something we have heard in the channel a fair bit recently. Has there been more maturity in both your go-to-market as well as alignment between your sales organization and the partner ecosystem to capitalize on the low-hanging fruit and the legacy displacement opportunity?

[William Magnuson, executive]

Yes. So, we have a highly diversified customer base, and we've always had a great ability to flex both our sales capacity, our marketing investment and our partner focus into both regions or, I guess, all of regions, verticals and account classifications or account sizes that we see the most potential in.And so, when I kind of look at those different dimensions, today, we're seeing the world experiencing pretty similar macro conditions. We've obviously mentioned the enterprise is in the near term, at least, performing better than SMB. But in the long term, we're investing across the range of customer sizes that we sell to today. We're excited about the potential from SMB all the way up to the world's largest enterprises.And we're cultivating partnership, partner relationships across that whole spectrum as well, inclusive of smaller marketing and growth agencies that work through our partner-led onboarding program to deliver to SMBs all the way up to the global systems integrators, the big marketing holding companies or the agency holding companies that work with us in the world's largest enterprise businesses. And as we see opportunities to break into whether it's particular verticals or maybe customer profiles that are characterized by changes to their regulatory landscape or maybe to their competitive landscape or places where we're able to look at the competitive installed base, whether it's a legacy Marketing Cloud or a legacy Marketing Cloud with a collection of point solutions.Those are all data points that our sales team and our partners use in order to pursue strategies, whether it's around just creating those opportunities, doing targeted account-based marketing or being able to do that in a more automated demand gen way and then all the way through the rest of the funnel. So very much we are tailoring and kind of targeting strategies around those types of considerations. But I would zoom out a little bit and realize that because of how diverse Braze's customer base is, that is very much a muscle that exists across multiple dimensions.

[Operator]

Our next question comes from Matt VanVliet with BTIG.

[Matthew VanVliet, analyst]

Maybe just following on the last topic around the partner community, especially around the consulting and agency types. How do you feel about sort of who you have in the portfolio? Do you have the right partners? Do you need to continue to build that number out there? Is it just really about driving home more business with the key partners that you're already aligned with?

[William Magnuson, executive]

I think we're still so early in building strong relationships across the services ecosystem that the answer to that is very vehemently, all of the above. It continues to be a major priority for investment.We've been super encouraged by the progress that we have achieved with those partners who have leaned into their relationship with Braze because it validates the fundamentals of the flywheel that I've spoken about in past quarters. It's win-win-win when we can bring business to the services ecosystem when they can then build their bench of Braze certified marketers. They can bring more finely tailored services to our customers, which helps them achieve more differentiated value out of Braze, and that just spins the flywheel of our community and our services ecosystem. And so, when we look ahead to Braze continuing to grow to orders of magnitude larger than it is today, our services footprint is both going to be deeper and broader. And it's going to be more global, and it's going to be across more areas of service.When you look at the entire life cycle of production of campaigns all the way through the execution, the data analysis and continuing to reach into more of the product surface area as well. And so, there's a lot of opportunity for our services partners to continue to partner with Braze across a lot of different dimensions. We're going to meet them with additional investment on our side and ensure that, that services ecosystem continues to grow in partnership with us.

[Matthew VanVliet, analyst]

And then, Isabelle, just quickly, do you have any metrics that you can share around sort of the mix of business that is influenced by some of those partners or maybe and conversely, can you give us a target that maybe we should think about over the next 5 years or say, of how much of the business could be influenced?

[Isabelle Winkles, executive]

Yes. So, we don't have specific metrics that we disclose or discuss. Certainly, we expect it to continue to increase. I think the way Bill characterized it is exactly right. We are in the early stages of this. A few quarters ago, our President Myles was like, "Wow, we have made more progress with these guys in the last couple of months than we have in the last like 5 years", which is right, but we are still in the early stages of this.And so, to be at a point yet where we are not only a signing, but also publicizing the attribution of our bookings or our top line to the partners, it's just too early to do that.

[Operator]

Our next question comes from Jake Titleman at Goldman Sachs.

[Jacob Titleman, analyst]

Can you guys please give us an update on sales rep productivity, how that's trended over the last few quarters? And, Bill, you also mentioned that you want to be ahead of the curve when the macro improves, so, what would it take for you to start hiring again?

[William Magnuson, executive]

Yes. So, as we've said, we've been very happy with our team's execution and the productivity of our sales team is absolutely a part of that. Looking ahead into next year, we're focused on first closing out a strong Q4. And while we're doing that, we're hard at work preparing for our next sales kick off in early February.We don't have details to share on this specifically today, but that kickoff will include some evolved pricing and packaging. We're going to be deploying more sophisticated territory carbs and account planning mechanisms. We hope that's going to continue to support improvements in velocity and productivity for our sales teams.You also heard Isabelle mention a little bit earlier that we've authorized additional hiring in this year, specifically focused in R&D in order to help support additional revenue and additional just product feature sets, more sell, more stickiness, more usability, et cetera, further into the future. As we look into next year and increasing the size of the sales team, as I mentioned before, with the highly diversified customer base, we do have an ability to flex new sales capacity and marketing investment into areas where we see strength.We are expecting an uneven recovery when we look at that from a global perspective. And so, we're ready to adapt to that as it presents itself, and we're hard at work trying to read the tea leaves in the many regions that we operate in around the world so we can deploy capacity when we have confidence that those regions can support it.I think that we're also going to look at account segmentation with respect to enterprise versus SMB as well as, in particular, at the high end within our global strategic accounts program with the largest customers, looking at new categories and verticals that we could potentially continue to expand into.And so, I think that seeing opportunities along those dimensions is what's going to give us the confidence to continue to build new sales capacity. And then along the way, we're going to continue to invest in the broad-based productivity improvements that we've been at work on for the last year. And to some extent, that's a job that's never done, but we've certainly been really happy with what that has meant from an execution standpoint.

[Jacob Titleman, analyst]

And then just a quick follow-up for Isabelle. So, you're guiding to 26% growth in 4Q, how should we think about that as a potential starting point for fiscal 2025?

[Isabelle Winkles, executive]

Yes. So, I'll speak sort of high level about 2025. But specifically for Q4, just remember, both Q4 and Q1 are seasonally low from a sequential growth rate perspective. So that is not unexpected and all analysts and anyone doing models should incorporate that fact into any forecasting. And you can look historically that is a pattern that repeats itself.I think that as we look out into the future, we are going to continue to take a risk-adjusted posture when it comes to guidance. And keep in mind that, and I said this earlier in the call, some of the results that happened over the back 2/3 of this year were as a result of North Star, which obviously we will lap in the early part of next year.And so, I would take that into consideration when not only thinking through what the guidance might look like, but then what the results might look like on what we're sort of planning for in terms of results on the other side of that guidance.And just remember that Q1 will still have a bit of a tailwind from the North Star acquisition, but that is pretty much the last quarter that we'll have a year-over-year tailwind. And so we will get to FY '25 in more fulsome detail in March once we have more visibility, given the results of Q4. But hopefully, that's helpful from at least a philosophy perspective.

[Operator]

'[Operator instructions]'. Our next question comes from Pinjalim Bora with JPMorgan.

[Pinjalim Bora, analyst]

Congrats for the quarter. It seems like macro continues to be a bit challenging, Isabelle. Is there a way to think about NBR going forward? Because you are kind of reaching or will be reaching get an easier comp starting in Q4, but macro continues to be challenging. So, I'm thinking, would you say kind of troughs at a point in Q4 or Q1? Or do you feel like it might continue to slide?

[Isabelle Winkles, executive]

Yes. So I think that it is a lagging indicator, especially given that it is a 12-month trailing. And so, while we don't guide on it specifically, our own internal models and forecasting will assume that from a risk-adjusted perspective, that there's going to be more to come out there. So I don't think we have fully called the bottom yet and that's mostly just because it is a lagging indicator part, mostly because it's a 12-month trailing statistic. So, I would incorporate that fact pattern in when thinking about the future.

[Operator]

Next question comes from Scott Berg with Needham.

[Scott Berg, analyst]

Great quarter. Bill, in your pre-scripted remarks, you talked about passing the $500 million in committed ARR threshold, congrats. It's obviously a big number. But how do you think about $1 billion or more than $1 billion? Can you get there with your current product set? Or do you feel like you need some additional -- whether it's modules, functionalities, channels, et cetera, to help achieve that goal?

[William Magnuson, executive]

Yes. I think that when we look out toward doubling again and then growing orders of magnitude after that, they will absolutely continue to be meaningful expansion of our product surface area.You already see us making forays into new buyer personas as we've expanded into selling things like Feature Flags to more of a Chief Product Officer, Chief Technology Officer, kind of a budget than CMOs. And we've obviously been doing a lot of investment into our data platform along the way is going to be continued expansion into different channels, continuing to expand our orchestration and personalization capability.And so, I think you should expect to continue to see a broad base of investment, which we're excited about how all of those new product expansions compound themselves into existing customer growth. It provides us with additional landing points and starting points for new customers and continues to just add more differentiated value for Braze over time, which obviously encourages stickiness and community growth. I think also, one of the things that I come back to when I think about our future growth is that Braze is right around 2,000 customers today, even as we're at $500 million in car. And so, as we expand to $1 billion in ARR, we'll expect to be somewhere around 4,000 to 5,000 customers. And as we continue to grow from there, we're preparing as an organization for having orders of magnitude more than that.And so as we look at upgrading our own internal processes right now, every time we look at whether it's a new post sales motion, a new way that we're continuing to add automation to things like product-led sales or product-led growth motions, et cetera. Those are all investments that we're making to prepare for a meaningful scale differences as we continue to grow.For Braze to achieve our community goals, we obviously need to have a much larger reach, but we think that's also a motion that will compound on itself. Speaking of that, there's also obviously, the agencies and the ecosystem and the partnership side, which also will help to compound our way to $1 billion and beyond. And so, you're seeing investment across a lot of different dimensions for Braze to be able to support that. We feel really good about the very diverse customer base that we have today. You hear me talk about that all the time, Braze is very much not a business that went in like highly penetrated and concentrated itself into a specific vertical or a specific channel or a specific geo.We have a very diverse foundation upon which to continue to build a very, very large business and build into a very large opportunity. It's obviously more challenging to start building a business that way than it is to start in a niche and be able to kind of build directly into it. But we also see it as being less risky as we look out to bigger numbers and kind of more long-term targets because we've already proven that we can sell into those verticals that we can satisfy those use cases that we can deliver a product to companies of those sizes and that we can solve not just regional or local use cases around the world, but also the unique nature of global businesses as well.

[Operator]

Our next question comes from Brian Schwartz with Oppenheimer.

[Brian Schwartz, analyst]

Great quarter. Bill, the commentary that you've been giving on the call about what you're seeing with the macro, I'm wondering if you're seeing a similar environment all around the world, specifically in EMEA, in APAC, in North America. Are there any differences? Or is there any stability or maybe somewhat improvement in any of the international markets?

[William Magnuson, executive]

No, we're not seeing any sort of meaningful improvement. I think everybody is kind of suffering under the same high interest rate environment, the same volatility, the same drive toward efficiency over growth, the same inflationary environments. I would say that we saw a different timing in terms of some of the venture world just because a lot of the companies in the United States had very recently raised large amounts of money. And so their runways weren't coming up on them quite as quickly.So, we are actually, to some extent, anticipating that, that could become more of a problem in the venture-backed world in the Americas and EMEA coming into next year as some of those runways start to run out. And I think we've already been seeing that in APAC over the last year where a lot of these startup businesses were a little bit less well capitalized heading into this environment. And so, that part of it, I would say, is uneven, but it's more like uneven timing on badness. All that said, we are also expecting the recovery and eventual loosening of conditions to similarly be uneven.We're certainly seeing different responses from governments and different currency performance and different paces of progress in terms of inflation, stabilization in different markets around the world. And so, for us, what that adds up to is that we need to continue to be really paying close attention to data, to evolving conditions and making sure that we're deploying sales capacity and marketing investments in the places where we start to see early signs of recovery because well, I think we're seeing similarly subdued negative macro conditions all around the world right now. We are expecting the eventual recovery to be uneven, and we want to make sure that we're quick to those markets that are early to it.

[Operator]

Our next question comes from DJ Hynes with Canaccord.

[David Hynes, analyst]

So Bill, we've seen some other marketing or CDP companies recently initiated or talk about rolling out a mobile channel to complement their existing e-mail, SMS and other activation channels. You guys obviously, went the other way, right, starting in mobile and then initiating other channels. Can you just speak to the benefit or challenges of going one way versus the other? Do you think there's a material difference? I'd love to hear your take.

[William Magnuson, executive]

Yes. So I'd first correct history a little bit and note that we actually started across 4 separate channels, and the very first version of our product that we launched included e-mail. And so, Braze is dating all the way back to our beta release in 2012 has been building on mobile and e-mail experience as well as in product messaging, which included both a persistent in-product message type through our news feed as well as a slide up message that was interactive with the customer.And so, our first version launch with 4 different channels, which included some that were pushed by their nature, some that were pulled by their nature, some that was integrated into a product and e-mail obviously being outside of the product.And the pressures that having that multidimensional channel set place on the segmentation and the orchestration and the personalization capabilities as well as the nature of being able to maintain the variant of keeping everything interactive in real time across all those different channel types meant that it was definitely harder for us to build in the early days because every time we rolled out a new targeting feature, we had to make sure it works across all those different channels. But now, we find ourselves in a position where, as we've gone from 4 to 5 to 6 to a dozen or more channels depending on how you want to count them, and that our foundations anticipated all those different dimensions that message types would have.And so, I think when you compare that then to a lot of our competitors that they either started in a single channel or they started in channels that were not integrated into the products.We have a lot of competitors who are focused on things like e-mail or SMS, which doesn't require any sort of integration into a code base where you're actually living inside of a product, and that means that they don't have preexisting relationships with the engineering and the product teams, and that's a really big goal for them to get over, being able to do push base or broadcast-based messaging and switch that to an individual customer opening up a product experience and needing to interactively load a personalized feed inside their product, just very different demands on even on just like the database and being able to deliver that ability to personalize. And so, when we look at the competitive set and we see any competitor that really grew up on a single channel or they grew up outside of the product or they grew up tied to a specific vertical over time, we just know that there's some pretty big casomes that they're going to have to get over, and they're going to be even harder to cross because they painted themselves into corners that they don't even realize right now.And so I think that Braze chose to build a really diversified business. I talked about all the dimensions of that across the customer base, but the same thing is true across our platform and channel set as well. And I'll just reiterate that while I think that's harder, in the early days that it creates more opportunity in the long term, and we're excited about what that means for our enduring differentiation.

[Operator]

We have time for one more question. The final question will come from Andrew Sherman with Cowen.

[Andrew Sherman, analyst]

It's Andrew on for Derrick. Isabelle, if you talk about growth trends in MAUs, I think this is about half of the contract structure for customers. What are you seeing there from your larger customers? And if the consumer improves, can that be a growth driver for you over the next couple of quarters?

[Isabelle Winkles, executive]

Yes. So, we don't really tie our sort of future sort of view of kind of economic performance to specifically to kind of the MAU. If you look at the MAU growth, actually, it's been more slow than our overall revenue growth.So, I know people sort of focused on this number, we generally try to kind of pull people away from it. What we've noticed in terms of just general buying patterns today versus kind of pre, when the market started to fall apart, people used to buy sort of for growth expectations. You're seeing some of this play out actually in the dollar-based net retention.People would buy based on expectations of growth and just knowing that they would sort of grow into what they had purchased. We are definitely seeing renewals and purchases come in more in line with where they actually think they're going to be using in the near term and then they will upsell over time as the growth warrants it.So, maybe you're seeing some of that in the monthly active user. We are very happy with the overall performance of the business, but not really overly scrutinizing the monthly evolution or the quarterly evolution of the MAU.

[Operator]

I will now pass the call back to Bill for closing remarks.

[William Magnuson, executive]

Thank you, Operator. And I just want to thank everyone for joining the call today. We appreciate your continued support and are looking forward to seeing you at a conference or on the road soon.