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Braze Inc
Earnings Call Analysis
Q4-2024 Analysis
Braze Inc
The company ended its fiscal year on a high note, with impressive revenue growth of 33% year-over-year, reaching $131 million for the fourth quarter. This growth spurt was fueled by a combination of factors such as the expansion of existing customer contracts, the onboarding of new clientele, and the contribution of recent acquisition NorthStar. Subscription revenue, the backbone of the company's revenue stream, accounted for a dominant 96% of this figure. The client base swelled by 15%, now boasting 2,044 customers, while large customers—those contributing at least $500,000 annually—grew by 29% and now make up 60% of the total Annual Recurring Revenue (ARR). Geographically, revenue streams remained strong internationally, with 44% of total revenue coming from outside the U.S., mirroring the previous year's performance.
From a profit standpoint, the company's strategic focus on efficiency was evident. It reported a non-GAAP gross margin of 67.9%, up slightly from the previous year, reflecting robust profitability despite the increased adoption of premium messaging channels. The company also enjoyed improvements across its operating expenses, with non-GAAP sales and marketing expenditure down to 42% of revenue from 47% in the prior year, and R&D and G&A expenses also optimizing as a percentage of revenue. As a result, the non-GAAP operating loss was substantially narrowed to $7.5 million from $16.7 million year-over-year, showing an effective reduction in losses by more than half, while non-GAAP net loss per share improved to $0.04 from $0.14.
Examining the company's balance sheet, cash reserves stood strong at $480 million. Operationally, the company swung from nearly breaking even to generating $3.8 million in cash from operations. However, it's worth noting that free cash flow remained negative, albeit marginally increased to negative $3.5 million. Such fluctuations are normal for the company, given the variance in customer and vendor payment patterns.
Looking ahead, the company remains cautiously optimistic amidst persistent macroeconomic challenges. For the upcoming fiscal year, it anticipates revenue of $570 million to $575 million, showing a planned growth rate of about 21.5%. Non-GAAP operating losses are projected to range between $20 million and $24 million, translating to an operating margin improvement of approximately 450 basis points from the prior fiscal year. The non-GAAP net loss per share is projected in the range of $0.08 to $0.12, based on an estimated 101 million shares. It's also expected that the company will achieve positive non-GAAP operating income and free cash flow by the end of the fiscal year, which would mark a significant financial milestone.
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Welcome to the Braze Fourth Quarter Fiscal Year 2024 Earnings Conference Call. My name is Leila, and I'll be your operator for today's call. [Operator Instructions].
I will now turn the call over to Christopher Ferris, Head of Braze Investor Relations.
Thank you, operator. Good afternoon, and thank you for joining us today to review Braze's results for the fiscal fourth 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 our 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 first quarter ended April 30, 2024, and the fiscal year ended January 31, 2025, the anticipated development performance and benefits of our products and features, including our Sage AI by Braze features the potential impact and duration of current macroeconomic trends, our anticipated customer behaviors, including vendor consolidation trends and their impact on Braze, 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 fourth 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.
Thank you, Chris, and good afternoon, everyone. We delivered another strong fourth quarter, generating $131 million in revenue, up 33% versus the prior year and 6% compared to the prior quarter, again demonstrating the high ROI and long-term value of the Braze customer engagement platform.
Our solid performance comes despite a selling environment that has remained challenging all year due to macro considerations and its associated scrutiny on budgets. We have continued advancing our strategy and evolving our execution in order to simultaneously deliver strong revenue growth and enhanced operating efficiency, improving non-GAAP gross margins by 90 basis points year-over-year and non-GAAP operating margin by over 1,100 basis points compared to the fourth quarter of last year.
We were again pleased with the strength of our enterprise business as we continue to capitalize on the legacy vendor replacement cycle and consolidation trend. And we achieved record upsell this quarter as customers continue to grow with Braze, adopting more channels, deploying more use cases, increasing their volumes and adding new business units and geographies.
In fact, this quarter, we secured our first 8-figure customer through upsell with a media and entertainment conglomerate who has consistently grown with Braze over the past 8 years. Continued expansion opportunities like these with our long-term customers speaks to our pace of innovation, stability and reliability at scale and our leadership of the customer engagement category.
As enterprise remains a strength for us, our roster of $500,000 plus ARR customers continues to grow as well, rising to 202 in the quarter, up 29% year-over-year. A testament to how customers continue to leverage rich first-party data and advanced artificial intelligence to drive sophisticated cross-channel customer engagement at scale. Notable new business wins and upsells in the quarter include AB InBev, Bojangles, DraftKings, FanDuel, Flix SE, which is the parent company in both FlixBus and Greyhound and Nestle Purina among many others.
We're also pleased to share that earlier in fiscal year 2024, we secured new relationships with both DoorDash and Wendy's. The performance, reliability and scalability of our platform is a core component of what many of these brands appreciate about Braze. Earlier this week, we published scalability and performance metrics for our full calendar year 2023, which included over 2.6 trillion outgoing actions, including the sending of messages, execution of webhooks and other campus operations that transform data and manage audiences.
Inbound, we processed over 7.5 trillion API calls, with 99.99% average system-wide uptime across all customers and products. Whether those API calls originate from our SDKs running in our customers' products, partner integrations or custom software running in our customers' back ends, these API calls deliver constantly evolving context about users and their actions in order to trigger messages and drive personalization strategies, showcasing the growing sophistication among Braze customers as they tailor the communications to each individual recipient.
During 2023, we also saw year-over-year growth of over 60% for messages sent with Braze Canvas, our no-code visual development environment, which marketers use to quickly implement sophisticated customer engagement strategies. This increase in usage reflects a rise in multistep cross-channel messaging flows and the continued adoption of sophisticated orchestration, experimentation and personalization techniques, all supported by Sage AI.
Designed from the ground up to scale of demand support massive scale at speed and minimize outages, our system is exceptionally reliable, even when faced with some of the world's largest consumer audiences. All of these metrics build on our privacy and security by design, which integrates safeguards at every level of our operation and is reflected in our privacy processes and security certifications.
As the customer engagement landscape evolves, we continue to win against a large field of competitors who cannot reliably deliver on real-time use cases, have limited channel selection or flexibility, a lower sophistication ceiling or simply don't scale. Similarly, we continue to make progress replacing legacy Marketing Clouds. As marketers realize that those clouds disjointed and siloed solutions are increasingly unsuited for modern customer engagement use cases.
This quarter, we replaced legacy Marketing Clouds at a European-based transportation company, a leading American health nonprofit, a U.K.-based QSR and a Japan-based digital software developer, among others. In addition, this quarter, we replaced point solution competitors at a design and collaboration platform, an athletics clothing retailer and a mobile gaming company. As I mentioned last quarter, we've been very happy with the execution of our sales team in the second half as we continue to navigate a choppy macro, and our competitive wins across verticals and geographies demonstrates both the flexibility and versatility of our platform as well as the enormous future potential of our business.
Braze has the right to compete and win with virtually any organization that has ambition or sophistication around customer engagement. If your organization has a person whose job is customer engagement, we believe Braze is the best-in-class solution for them. In order to maintain our technical lead, we continue to invest in improving the capabilities of the Braze platform. With the wealth of data captured by Braze and the introduction of AI-powered tools, marketers are able to enhance relevance and performance while saving time and energy and production.
In order to meet the demands of this paradigm shift, we are infusing AI throughout our stack to help marketers efficiently implement highly personalized cross-channel strategies. Last year, we launched Sage AI by Braze to inform and scale personalized, sophisticated and lasting experiences that consumers love. At that time, we spoke to you about some of the exciting enhancements under development that further empower brands to embrace the craft of customer engagement, allowing them to move beyond simply sending messages.
Just yesterday, we announced new features that simplify and accelerate the ability of marketers to tailor recommendations to each unique customer, further unlocking sophisticated personalization and prediction at scale, inspiring creativity and driving high-value actions from customers. At the same time, each feature is easily accessible and located intuitively across the marketer's workflow to support more creative testing, optimization and personalization.
These innovations include AI item recommendations, personalized path, tone control and estimated real open e-mail rates. All of these features leverage comprehensive first-party data inputs in real time, allowing for smarter decision-making and powering better business outcomes. Let me take a moment to walk through each of these offerings.
Last fall, I mentioned the development of AI item recommendations. Today, I'm pleased to announce that this engine, which uses AI to enhance message relevance with better product, service and catalog recommendations is now generally available. AI item recommendations leverages cutting-edge transformer driven AI models and is layered on top of Braze's catalogs to enable easier setup and tighter integration with the rest of the Braze stack.
Accordingly, these recommendations can be used across every channel that Braze offers and as part of sophisticated cross-channel journeys and canvas. We believe AI item recommendations will increase campaign revenue and improve customer loyalty for the brands to deploy it. I'm also pleased to announce the release of personalized paths, an automated decision-making feature within Canvas that scales personalization by matching each customer with the message, copy, creative channel and offer that they are most likely to engage with.
It can be incorporated at any point in a canvas journey and used across any channel, allowing it to be combined with sophisticated personalization and orchestration techniques. Personalized paths enables marketers to leverage AI to deliver more value to their customers through deeply customized experiences while also saving time for them and their colleagues in engineering even as they delve into more sophisticated experimentation.
In addition to the work we're doing using our own custom models, we also continue to deliver productivity enhancements that utilize prompt engineering and fine-tuning of publicly available models like open AI's GPT-4. Recall that we integrated ChatGPT and Dolly into Braze in May and December of 2022, respectively, before the AI hype of early 2023. And it's been exciting to see how customers have used and experimented with these features.
We believe there is even more potential for marketing teams to quickly generate and validate creative assets to support more effective campaign creation and testing while maintaining brand voice and safety. Now we have built in generative functionality we call tone control, which helps marketers dictate and control the tone of AI-generated copy directly in Braze. This can save marketers' time, help them craft more authentic experiences, foster additional creativity, quickly generate variance for testing and experimentation and help eliminate mistakes.
Finally, I'd like to highlight our estimated real open rates feature. Another use of machine learning that allows Braze customers to continue to rely on data-driven content strategies even as changes in the privacy landscape, obscure certain data inputs. This solution addresses the changes made by Apple's mail privacy protection program, offering marketers a more complete view of open rates for e-mail campaigns by controlling for the uncertainty created by mails privacy protections machine opens.
One early AI customer success story that I'd like to highlight is from Koro Drogerie. A German super food e-commerce company, which tested our new AI item recommendation offering to help determine what products to offer to which customers and drive purchase decisions. Koro sinks their product catalog into Braze in real time with Braze's cloud data ingestion feature and can then intelligently suggest product offerings tailored to individual customer preferences.
By combining the simplicity of Braze's cloud data ingestion with the power of AI item recommendation, Koro gained valuable insights into new user behaviors, empowering them to deliver highly personalized recommendations from their extensive catalog of over 1,000 products. In addition, they drove these improved results with significantly less effort, automating everything from the data warehouse to the personalized recommendation seen by customers. Most importantly, Koro tripled their purchase rates when these personalized product suggestions were incorporated into their onboarding messaging flows.
Our pace of innovation and ease of use also continue to earn industry accolades for our excellence in software products. Recently, G2, the largest and most trusted marketplace for software, recognized Braze across 6 categories in its annual best software awards, including the category's best software products, global software companies, high satisfaction products, marketing and digital advertising products, products for enterprise and products for mid-market.
Our solutions inclusion in the G2 best of Software awards is a testament of the strength and loyalty of our customer community and our ability to deliver high ROI solutions that our customers need to power outstanding customer engagement for their users. Before I turn it over to Isabelle, I want to update you on our latest social impact initiatives.
In 2021, Braze joined the Pledge 1% movement through which we have reserved nearly 1 million shares of our Class A common stock to donate to a donor advice fund. Thus far, Braze's surpassed more than $1 million in grants via our Braze for Social Impact Fund, of which more than half have been directed by employee grant programs. Our social impact mission is to amplify employee impact to create opportunity for underserved groups within our communities and to accelerate science-based climate solutions.
We look forward to growing these efforts through continued employee advocacy and participation over time. Thank you for your continued support at Braze. We are very excited for the year ahead. Our strategy of driving innovation to create industry-leading solutions remains unchanged, and we believe our investments in new product growth, channels and advanced AI and machine learning, coupled with strong secular customer engagement tailwinds will keep Braze on the path to becoming the industry standard for cross-channel customer engagement.
And now I'll turn the call over to Isabelle.
Thank you, Bill, and thank you, everyone, for joining us today. As Bill stated, we reported a strong fourth quarter with revenue increasing 33% year-over-year to $131 million, driven by a combination of existing customer contract expansions, renewals and new business.
The quarter included a contribution of slightly more than $3 million in revenue from the NorthStar acquisition, which closed in June. Subscription revenue remains the primary component of our total top line, contributing 96% of our fourth quarter revenue while the remaining 4% represents a combination of recurring professional services and onetime configuration and onboarding fees. Total customer count increased 15% year-over-year to 2,044 customers as of January 31, up 274 from the same period last year and up 33% from the prior quarter.
Our total number of large customers, which we define as those spending at least $500,000 annually grew 29% year-over-year to 202 and as of January 31, contributed 60% to our total ARR. This compares to a 57% contribution as of the same quarter last year. Measured across all customers, dollar-based net retention was 117%, while dollar-based net retention for our large customers was 120%. Expansion was again broadly distributed across industries and geographic regions. Revenue outside the U.S. contributed 44% of our total revenue in the fourth quarter compared to 43% in the prior year quarter and in line with the third quarter of this year.
In the fourth quarter, our total remaining performance obligation was $639 million, up 40% year-over-year and up 14% sequentially. Current RPO was $409 million, up 31% year-over-year and up 11% 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 is slightly above 2 years and increased modestly during the quarter as more customers committed to longer-term relationships with Braze.
Non-GAAP gross profit in the quarter was $88.9 million, representing a non-GAAP gross margin of 67.9%. This compares to a non-GAAP gross profit of $66.2 million and non-GAAP gross margin of 67% in the fourth quarter of last year. The 90 basis point year-over-year margin improvement was driven by ongoing personnel efficiencies and the continued cost optimization of our technology stack, partially offset by increased adoption of premium message channels.
Non-GAAP sales and marketing expense was $55.2 million or 42% of revenue compared to $46.5 million or 47% of revenue in the prior year quarter. While the dollar increase reflects our year-over-year investments in head count 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 $21.2 million or 16% of revenue compared to $19 million or 19% of revenue in the prior year quarter.
The dollar increase was primarily driven by increased head count 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 $20 million or 15% of revenue compared to $17.5 million or 18% of revenue in the prior year quarter. The dollar increase was driven by investments to support our overall company growth, including head count costs and increases in software subscriptions and licenses.
Non-GAAP operating loss was $7.5 million compared to a non-GAAP operating loss of $16.7 million in the prior year quarter. Non-GAAP net loss attributable to Braze shareholders in the quarter was $3.5 million or a loss of $0.04 per share compared to a loss of $13.7 million or a loss of $0.14 per share in the prior year quarter.
Now turning to the balance sheet and cash flow statement. We ended the quarter with $480 million in cash, cash equivalents, restricted cash and marketable securities. Cash provided by operations during the quarter was $3.8 million compared to $12,000 in the prior year quarter. Including the cash impact of capitalized costs, free cash flow was approximately negative $3.5 million compared to negative free cash flow of $1.9 million in the prior year quarter.
As we have stated before, we expect our free cash flow to fluctuate from quarter-to-quarter given the timing of customer and vendor payments. And now turning to our forecast. We continue to see solid interest in high-quality customer engagement solutions, particularly from existing customers. While macroeconomic headwinds persist, and we continue to face constrained marketing budgets and slower new business growth, levels of volatility and uncertainty have declined as we, our customers and our prospects have learned to better navigate this environment.
As always, we approach our guidance with a prudent and risk-adjusted methodology, and assume current macroeconomic conditions persist over the forecast horizon. For the first quarter of fiscal 2025, we expect revenue to be in the range of $131 million to $132 million, which represents a year-over-year growth rate of approximately 29% at the midpoint. While we have not traditionally guided to gross margin beyond our long-term range of 67% to 72%, as I just noted, we have seen increased adoption of premium messaging channels, including WhatsApp, which will likely result in a first quarter non-GAAP gross margin that is at the low end of our long-term range.
For the full year, we expect our non-GAAP gross margin to be within our long-term range with sequentially improving gross margins throughout the year. First quarter non-GAAP operating loss is expected to be in the range of $13 million to $14 million. At the midpoint, this implies an operating margin of approximately negative 10%. First quarter non-GAAP net loss is expected to be $10 million to $11 million and first quarter non-GAAP net loss per share in the range of $0.10 to $0.11 per share based on approximately 99.5 million weighted average basic shares outstanding during the period.
For the full fiscal year 2025, we expect total revenue to be in the range of $570 million to $575 million, which represents a year-over-year growth rate of approximately 21.5% at the midpoint. Fiscal year 2025 non-GAAP operating loss is expected to be in the range of $20 million to $24 million. At the midpoint, this implies a non-GAAP operating margin of approximately negative 4% or a 450 basis point improvement versus fiscal year 2024. Non-GAAP net loss for the same period is expected to be in the range of $8 million to $12 million.
For fiscal year 2025, non-GAAP net loss per share is expected to be $0.08 to $0.12 per share based on a full year weighted average basic share count of approximately 101 million shares. We remain on track to achieve positive quarterly non-GAAP operating income and positive free cash flow by Q4 of this fiscal year. I'll close by reiterating our excitement in Braze's future.
We remain focused on partnering with our customers to deliver best-in-class customer engagement solutions and driving product innovation while consistently executing against our financial targets. We remain confident in our ability to grow revenue 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 Instructions] Our first question comes from Arjun Bhatia from William Blair.
Perfect. Congrats on the strong end of the year. Some exciting capabilities from an AI perspective. Bill, I was curious if you could just touch a little bit on what prep work if any customers might need to do before they can leverage some of these AI capabilities that you've introduced from Sage. Like what needs to be done from a governance, a data prep perspective? And it might vary by product. I'm just curious how long that might take and what we're doing [indiscernible] customers here?
Yes. Thanks for the question. So we're continuing to invest in AI across the entire product surface area. And I hope that the 4 recent releases that I highlighted earlier helped to demonstrate that. You're seeing a mix of machine learning techniques, multiple ways of using Gen AI, and it's being integrated throughout our stack. And so as you alluded to, it definitely depends on the future, but we continue to work in a couple of different categories.
The first one, and I mentioned this before, is that copilot vision where we want using AI and Braze to make it feel less like you're using a tool more like you're working with a whole team of specialist consultants to help you tackle your customer engagement challenges. And those are things like tone control that I mentioned earlier as well as some of the helpers that we have to help people write code or scripting in some of the more technical parts of the product. And just generally, the Gen AI integrations, those all just work immediately out of the box, no setup from the customer. And the entire purpose of them is to improve marketer productivity and allow for them to operate in a quicker manner with more agility and be able to take advantage of more of our products.
Something like the AI recommendations that I mentioned, that does require a bit more setup. But as you heard in the customer example that I shared in the prepared remarks, we've done a lot of work to be able to improve the time to value there and streamline that setup. So in that example, it actually builds on top of 2 separate products, both of which we independently monetize. So our product catalogs feature is used for a variety of different content capabilities within Canvas. And then the item recommendations capability, which uses TRANSFORMERS to be able to provide even better recommendations and more content personalization sits on top of that.
And those product catalogs can actually be built up through our cloud data injection capability, which means that the marketer with simple configuration can be automatically loading in all of the content from the product catalog directly out of a data warehouse like Snowflake, bringing that into Braze and then the item recommendations are similarly just clicks and simple configuration within Braze to then pull that into the content of any message channel.
And so it is a place where they need to have their product catalog data clean, but many customers already have that. And the ability to interconnect that have something like cloud data ingestion, be able to automatically run all of the ETLs with no operational burden by the customer and then have item recommendations sit on top of that and be available in every single channel. I think it's just a great example where -- that is something which has a lot of moving parts to it, but because of the way that we vertically integrated the capabilities in the Braze stack, we are taking on the burden of managing the vast majority of those moving parts.
And we are, therefore, elevating the job of the marketer up to that of connecting their business strategy to the customer journey and making sure that they are orchestrating and prioritizing their own goals in a way that's going to drive relevance for the customer and create value for their business.
Perfect, that's super helpful. And one, if I can, just on the demand environment as you see it. I think you called out a host of customer wins in the fourth quarter, some were traditional enterprise, some were more digital motives. Can you talk a little bit about where you're seeing demand differences, if any, between those 2 groups? Or as you think about this year and go-to-market allocations, is there any between those 2? Is there any one where you might lean heavier or might see stronger demand relative to the other?
Yes. So I think that we're seeing similar trends that you're hearing about elsewhere, which is that there's relative strength in the enterprise as compared to the commercial segment. I think that we're seeing relatively similar demand environments globally when we look out from geography to geography. And similarly, relatively similar across verticals. So most of the -- most of the differentiation that we see tends to be correlated with company size.
That is certainly going to play into our go-to-market investment strategy, but a lot of that resourcing -- those resourcing decisions were already made earlier this year when we had declining sales capacity over last year. We are now, for the first time in over 12 months, increasing our sales capacity and hiring new people into that team. We're doing that broadly across different categories and in different geographies where we are able to -- where we're seeing opportunities to meet incremental demand, but that's coming off of a baseline where we did reorient those go-to-market resources across the commercial and enterprise segments last year to be able to match what we continue to see persisting, which is relative strength in the enterprise versus the SMB.
So when you sum all that up, we are seeing participation rates increasing in our sales team. I mentioned that we've been very happy with the execution of the sales team, in particular, in the second half of the year. And that is why we are at the point now where we are investing and adding additional sales capacity for the first time in over a year, and we're excited about that.
Next question comes from DJ Hynes from Canaccord.
Congrats on the quarter. Bill, maybe one for you. So, look, obviously, you spoke to taking share from legacy Marketing Cloud, but we're seeing a lot of AI innovation from the platform firms, right? I mean Salesforce spoke to data cloud revenue largely being attributable to their Marketing Cloud. Are you seeing any signs that the velocity of replatforming opportunities is slowing at all as customers maybe contemplate like, hey, I'll stick with Dolby or sales force whoever for a little bit longer to see if AI can make a difference? Or is there any discernible change just as those firms continue to kind of tout the story around AI?
No, I don't think that we're seeing much of a change there. That story of, hey, hold on, there's 1 more thing coming in a little while. Right now, this is the new flavor of the month for them is Gen AI, but we've seen that as an incumbent advantage that works against that transition from the legacy tools into a place like Braze for years now. And so it doesn't -- over the long term, it doesn't really feel materially different.
And I think the legacy Marketing Clouds even as they're working to put in place some of these Gen AI features that are either going to help with marketing -- marketer productivity, or some of the work that Salesforce has been doing, they were still fundamentally built in a world where they assumed they were in control of the customer journey, the touch points with the customer, we're relatively linear. They didn't demand the same level of real-time or interactivity. They were single threaded. It's built into the foundations of how they process data, how they make sense of it, how they dispatch messaging. And you continue to see that those things are in their foundations, they can't fix without their own replatforming.
So even as they continue to try to make acquisitions and bolt -- yet more things together, if anything, I think that it continues to work against them as it increases the amount of complexity that they have. And the way that they were originally architected may have been appropriate for the pre-mobile world, where most e-mail was read on your desktop at work. But modern consumers are always on, they interact with brands on their terms. They're on nonlinear customer journeys.
They have an ever-expanding collection of mediums and channels that they want to be communicated with and that they want to use when they're accessing your products and services. And I think it's really important to grapple with that fundamental reality and the foundation of your product. We've embraced the fact that we're a companion to the customer journey. We carefully listen across all the touch points. We're working to deeply understand the customer and the context that surrounds them.
And then we're leveraging that understanding to help shape the outcomes to achieve the brand's goals. And those goals are -- I spoke about this a little bit -- a little bit ago that we want the marketers to be able to have complexity controlled for them to the extent possible so that they can be operating at a more strategic level. They can be really connecting themselves to what the customer's journey looks like and feels like so that they can take their own brand, their own company's goals and attach those to the customer journey and be able to shape it in a way that's more positive for them, whether that's incentivizing advocacy, avoiding churn, it's helping build loyalty or drive purchases or even just educating their customer and making sure they know there's a steady hand alongside them during their products and service journey.
These are all use cases that Braze fulfills and in the modern customer engagement environment, they all demand that these foundations are able to be event-driven in real time that they can accommodate the nonlinear customer journey and really engage with them on their terms as a companion.
Yes, makes a ton of sense. That's helpful color. As well, maybe I could follow up one on the numbers for you. So like very rough math, this year, half of your growth came from the installed base half from net new, right? You had 33% growth, 117% NRR. As we look to fiscal '25, like how does that growth matrix feel to you as you contemplate what's in the guide? Like how much from net new, how much from the base?
Yes. So we still generally try to eat that sort of 50-50. And actually, we're always sort of trying to index on more than 50% coming from the net new. And so when I talk about that dollar-based net retention not yet having hit the bottom. Some of that is by virtue of trying to index a little bit more to that net new.
So I don't actually think we've fully hit the bottom on that number just in case I get that question. And so that's how we think of the mix is trying to continue to index a little bit more towards the net new.
Our next question comes from Ryan MacWilliams from Barclays.
For Bill, I know a lot of the focus is on the largest customers from the legacy Marketing Clouds. But have you noticed any changes in the competitive environment for -- against your private customer engagement competitors? Like have you seen more wins from those competitors? And I only ask because it may be harder for them to invest in some of these new AI capabilities and features that you guys cover on it.
Yes. I mean I think we continue to broadly experience our competition in the 2 major segmentations that I spoke about before with legacy Marketing Clouds at the high end of the market and the collection of start-ups that vary by vertical or geography in the mid-market and low end. We continue to only see sporadic competition from the start-up set in the enterprise. And most of the start-up competitors, I think, are also operating below our pricing floor, which remains in the 20,000 to 30,000 range.
When I think about the R&D burden that's been placed on the private startups, in particular, especially those that haven't been hiring for quite a while as they've been trying to get themselves IPO ready. It's definitely apparent that product velocity for many of them has slowed down. And I think that -- I think that's fair to say it's not just the AI and machine learning features that are difficult for them to build, keeping up with the continued advance of channels and the adoption that marketers want to make as there are new opportunities and new ways to be communicating with customers, keeping up on the rapidly changing data science universe and the kind of data warehousing universe as well.
There's a lot required in order to keep up with the space right now. And I think it is something that product velocity and the agility of the R&D teams is going to be really important as we continue to build on the stretch here.
Appreciate the color there. And then for Isabelle, phrase historically has been prudent with your initial revenue guidance for the year. Just to double click on that, is there any change to the guidance philosophy this year? And are we largely through like the COVID era renewals of some customers that were maybe more optimistic in their growth projections 2 years ago? Or maybe is there still some of that left to start 2024?
Yes. Thanks for the question. So first on the overall guide. So look, the macro continues to be challenging. It's not deteriorating, but it's certainly not improving. We're still seeing customers exhibit overall price sensitivity. They're buying, as we've said over the last couple of quarters, continuing to buy for their known needs rather than growth.
And that said, we've actually learned to kind of adapt to this environment and some of our customers and prospects. So we do expect a little bit less volatility in our results versus last year. So we haven't really changed our guidance philosophy, but I would say the environment and the context around us has to be considered. So we'll continue to take that risk-adjusted approach, but we feel good about the guidance that we've set forth for the year. And sorry, your follow-up question on that?
So it's not so much the COVID piece specifically, but there was sort of the follow-up dynamic where customers were just generally exhibiting a desire to sort of buy for the current environment. And so even in upsells and that manifests itself in the dollar-based net retention as well, the upsells are really priced or sized more for what they need in the immediate term as opposed to buying for growth. So it's not so much. There is still a bit of the prior contracts that are working themselves out.
We're through a lot of that. But the dynamic itself continues only because the upsell pieces are also now representative of buying for what they need as opposed to buying for future growth. .
That makes sense. Appreciate the color.
Our next question comes from Gabriela Borges from Goldman Sachs.
Bill, I remember recently, I think it was maybe a year or 2 ago, when you unbundled e-mail and that was the catalyst for helping with the legacy displacements. I'm curious when you hear from your sales team today, what are the -- what are the factors that are within your control that allow you to maybe pull the lever a little bit more on some of the legacy replacements. What are the sticking points which are still within your control that you could maybe push a little harder on ?
Yes. Great question. I think that one of the major ones that has kept a lot of people in legacy players is also the services ecosystem, which is worth talking about a little bit. One of the things we've been talking about the last few quarters is just how pleased we are with our success across the global systems integrators and the large major marketing agency holding companies. And we continue to really build out the Braze enabled services ecosystem around the world and in all different kind of levels for customers.
And so one of the things that definitely has gotten in the way of some of those migrations in the past has been the heavy lift of moving from a platform that you've maybe been on for 5 or 10 years as well as the requirement to move into what is ultimately a new paradigm in a new way of modeling your data, a new way of thinking about how you instrument and how you measure performance and such as you move into braze. And so I think that a key component of that, especially for some of the -- some aspects of the early majority, definitely when you get into the late majority of those transitions that pairing that up with services ecosystem has been really important.
And I think that we're continuing to see the tide shift away from that being a large legacy marketing cloud incumbent advantage to one where there's a lot of eagerness to get involved in the new wave that Braves is really representing as we're growing into the enterprise. From a product perspective, we've always had a portion of our R&D dedicated to enterprise-specific features and capabilities. Some of these things around approvals, workflows and compliance and security as well as just data management and governance and things like that. And you're continuing to see our road map accommodate those.
We did build out more approvals, workflow capabilities through the back half of last year. We've obviously continuously improving our own data governance capability, things like cloud data ingestion that I mentioned earlier are definitely more Infosec friendly in various ways because it allows for the customer to keep a lot of their data in their data warehouse. And so those are all things that are certainly supportive of smoothing the path to be able to get those enterprise transformations going and they all work together, I think, in our favor, and that's why we're -- that's a big part of why we're seeing acceleration.
That all makes sense. And the follow-up is on the SMB ecosystem. And in particular, you made a couple of comments last quarter on the technology-backed ecosystem. So my question here is, do you think that there is a scenario where we see mean reversion over the course of the year up. And then maybe for Isabelle, how do we think about the implications for that on new logo growth? Is there a scenario where we could see more of an improvement over the course of the year?
Yes. So on the new logo growth, one of the things that you're seeing and the dynamic of the logo growth this quarter is it's not -- we had -- we were very successful in our upsell motion in Q4. And when you do an upsell, you can absolutely do upsells where there's new contracts that are being signed with an existing parent company. So because of the way we define the customer count, what you're missing is sort of the number of net new order forms that are actually being printed.
And actually, when I've looked over time at the number of order forms that have been printed or signed within a quarter, there was no material deterioration in Q4 at all. So I think what we're seeing in terms of like the logo count right now is really just a bit of a shift towards upsell versus net new. I think on the SMB piece, there is still good momentum with new SMB. What you're seeing, though, is also one, the fact that a lot of this is happening in at the ultimate parent level, so you're not seeing the net new, but also with the SMB, we're still seeing levels of logo churn that are working against us.
Now these are much smaller accounts, which is why you're seeing the dollar-based net retention continue to hold up. But there is logo churn that we're working against as well.
Our next question comes from Pinjalim Bora from JPMorgan.
A couple of questions for Isabelle. Can you talk about the investments going into fiscal '25? I think Bill said, talked about sales capacity, is that 100% of the incremental investments? Or is there anything else that the incremental dollar is going towards?
And then a follow-up on NDR. It sounds like it has not bottomed at this point. Where do you expect the NDR to bottom? I mean if I look at the guidance of 21% and if you kind of maintain that 50-50 between expansions and new logo, could NDR continue to grow towards low double digit? Is that what is baked into the guidance at this point?
Yes. I'll take the NDR question first. So I've said pretty consistently that I think there's -- I use the term historically more air to come out of the balloon. What -- we're very pleased with the results that happened in Q4 and what you saw was actually moderation in the reduction in that number sequentially. So historical over the last couple of quarters, it's dropped about 2% sequentially this quarter, it dropped 1% sequentially.
So I think there are definitely fact patterns that are working in our favor to help that stabilize, but I'm not calling the bottom on this. We don't guide on it. And I do think in the context of the scenario for guidance, I would assume that, that number continues to tick down.
And then with respect to overall investment in the year, we're broadly investing in R&D right now. We're investing in marketing and across go-to-market as well as in building sales capacity, and we're excited to be doing that. where we see a lot of great opportunities for continued revenue growth as we build out and monetize new products. You may have seen our rebrand that we launched a little bit earlier this year.
We've been really excited to be doing some of our first major out-of-home that we've ever done before in order to help build awareness and visibility for the new brand in particular, and we're excited about the work that, that's been doing as we've been attending more events around the world. And so there's a lot happening at the kind of the top and the middle of the funnel as well in addition to building sales capacity and continuing to invest in R&D.
You may have also seen that our international expansion has continued. So we've opened new locations in Bucharest in Romania -- or Bucharest, Romania in Sao Paulo in Brazil as well as in Seoul, in Korea. And we're going to continue to invest in building out our international presence, especially after the successful injection of the NorthStar acquisition last year, which has given us an extremely firm foothold in the ANZ market.
Our next question comes from Scott Berg at Needham & Company.
Congrats on a great quarter. Bill, you mentioned you signed the company's first figure customer in the quarter, mainly through looks fixing customer expansions. But what does an 8-figure customer look like to Braze? Is it heavy on 1 channel? Is it a multichannel type strategy? How should we think about that type of deal?
Yes. So it's multiple across a bunch of dimensions. So we're working with multiple business units across multiple geographies. It's across multiple channels and multiple use cases. There's -- when we look at that, customer, in particular, we're helping with -- we're actually helping with a broad first-party investment strategy, where all of those business units are working together.
And it's actually really incredible to see as they're able to invest in building up the direct-to-consumer relationship. They monetize it in multiple ways. They help cement the loyalty in ways that are self-reinforcing as those different business units work together. I think that, that's a really incredible testament to how Braze integrates both into the messaging surface as they're communicating with the customers, but also the back end from a data perspective that all of those brands, all of those kind of divisions across the globe are able to work together and provide a coherent experience to the same customer throughout it.
And that's also a customer where there's still a lot of opportunity to continue to grow. We think that -- when we look out across even our high 7-figure customers, most of them, we still have great opportunity to continue to expand both into net new channels as well as expand backwards where most of these really big multinationals that are in our global strategic accounts program. We still coexist with the legacy Marketing Clouds. And if history is any guide, it's only a matter of time before we fully consolidate them out, and that represents yet more upsell opportunity for us even in these customers that are already quite large.
Got it. Helpful. And then my follow-up question, we were at the Shoptalk conference last week in Las Vegas, which you all had a nice presence at. But one of the key themes at the conference this year was all about personalization through the entire kind of merchant consumer relationship. And obviously, marketing is a big part of that. But the AI bench over the last year, this big wave on Gen AI model seems to be pushing on customer interest for more personalization throughout that life cycle. Do you think you're seeing that in some of your demand and sales cycles out there today that this push a rush for trying to adopt anything with a Gen AI feature has actually been maybe an incremental tailwind over the last 12 to 18 months.
Yes. I think it's been helpful. As I mentioned before when I talked about some of the things that hinder people moving from the legacy clouds, a lot of them are just reasons why people feel that what they're doing today is good enough. And so when something like Gen AI enters the picture, it gives them a strong reason why what they're doing today might not be good enough, especially if they feel that they can't take full advantage of modern machine learning.
And I think that when you look at, for instance, any company that has assembled a set of point solutions where they've got half a dozen different channels and maybe 3 or 4 different software platforms that are servicing those channels, and you ask them, how do you do a great job of optimizing across those channels? How do you actually deploy more sophisticated orchestration strategies that take into account the nonlinear customer journey?
How do you keep all of them synchronized interactively so that when you have that opportunity to personalize a moment that matters for the customer, which by the way shows up out of the blue because we engage with -- customers engage with brands on their terms now. The simple answer is that when you assemble the collection of point solutions like that, simply can't leverage machine learning in the same way as you can with a vertically integrated and consolidated platform like Braze.
And so there's a lot of examples over the years where additional complexity or new technical capability has come into play, and it's helped us move up the adoption curve and get to people that are maybe more and more reticent to go through the switching cost of moving from what they were doing before. to a more modern form of customer engagement. And I think that the advent of Gen AI is a really great example of that. Not only the capabilities that are available to you, but as we've spoken about before as well, also aspects of Braze which are technically difficult to use sometimes.
And I think that when you're able to -- when you're able to actually bring to bear generative AI to, for instance, automatically generate e-mail HTML for someone or to automatically generate liquid syntax for them to be able to do a certain form of conditional content personalization or when you bring in into play things like tone control, and you give them a really powerful experimentation tool and instead of them just kind of staring at a blank canvas and trying to figure out what the other 3 variants are, we can suggest them, and they can move along more quickly.
And so those are all great examples where a lot of the ways of doing ways of doing customer engagement in a more modern way, that's more agile, that's more experimental that relies on more real-time data, which are all things that are in our foundation for much of the marketing world, especially teams that are strapped for resources, it's historically been a little bit harder for them to use those.
And so I think that it's both looking at places where Gen AI or things like our transformer driven item recommendations or things like our personalized path capability that are using machine learning and in order to do automated decision-making and automatically optimize, those are all, of course, improving results for people that are already deep in that optimization game. But there's a big part of the market as well that still needs to simply graduate from batch and blast and so to the extent that Gen AI can either motivate them to do so or it can smooth that path by improving your productivity or making the more technical parts of our product more accessible and frankly, less scary, I think all of those things compound together to really help us.
Next question comes from Brian Peterson from Raymond James.
So I think there's been some debate on how spam roles, maybe be impacting the industry. I'm curious how much that's come up in your customer conversations? And how do you think that it may kind of stack rate as a potential growth catalyst in terms of new logos in fiscal year '25?
Yes. So as I'm sure you're aware, Braze has been in front of these changes from the start. And our customers have actually always been compliant with these rules due to how we operate our deliverability practice. Nevertheless, we published a lot of material on it. We prepared our customers, partners and the broader marketing community with content and webinars. And that was really positive. I think that we navigated the change without any noise or problems.
Braze also doesn't pool centers together and each one of our e-mail sending customers is in control of their own reputation. To the point I just made, there are sometimes stumbling blocks to move into a place like Braze and this has historically been one of them. the need to manage your own reputation was sometimes 1 of the things that held customers back on shifting to Braze, but now that it's a requirement everywhere, the playing field is leveled and our other differentiators are able to shine through. We also think that over time, changes of this nature of ISPs are likely to lead to negative selection bias and any tools that do continue to use [indiscernible] people.
And that's going to cause them to continue to deteriorate and effectiveness over time. And so there might still be some people that are cleaning to it. But from our perspective, if you're going to be on the right side of history, you just need to make this change. And then I would say in terms of stack racking the impact, I don't think it's going to be a massive impact. But it's yet another example where anything which makes the deliverability landscape more complex, benefits Braze relative to the rest of the category because of the sophistication that we have in targeting orchestration.
This was true as GDPR came into effect. It was true when Apple rolled out their ATT framework. It was true last year as carriers started clamping down on short code spam and abuse and sharing. Each of those cases, we've been on the right side of history and those changes to the landscape only serve to strengthen our differentiation and create more reasons for marketers to move beyond the undifferentiated batch and blast that we were just talking about and embrace that more moderate approach to customer engagement.
And so when I look at the impact of things like this as a business, I think it's positive, but I would also just reiterate that the secular trend has been there for the last 5-plus years. I think every 6 months, across one of the channels that we work with. There's a major change which tells everyone to shape up and get more sophisticated and Braze is already there, waiting for them. And it's just yet another one of those that we think catalyzes people to go through the switching costs and moving to a more modern customer engagement platform.
I appreciate all the color. And maybe a follow-up for Isabelle. You mentioned on the gross margin. I appreciate the guidance there, but there's a mix-driven dynamic that's pressuring results in the first quarter. Does that mix change throughout the year to drive the improvement? Or are there factors that's driving the gross margin improvement throughout the year?
Yes. So there's a couple of things at play. So as we continue kind of the channel expansion and into more and more of these sort of premium messaging channels, this has always been part of our growth strategy. It supports the need for sophisticated platform like ours for cross-channel orchestration. So all of that's great.
What we've seen with, in particular, with WhatsApp is, obviously, it is a premium messaging channel. It is sold at lower margins versus the rest of the parts of the platform. We've seen faster adoption rates of this -- which is actually great. We're seeing our customers actually leg into their purchased volumes just much, much more quickly, which is great. And so we've reached sort of a steady state consumption for the purchase volumes faster than we have with some other channels.
So while this is great, we're also operating at a relatively small scale still in these volumes. And so our unit cost for this channel, in particular, is still high. And so as that continues to grow in scale, we are going to be able to capitalize on cost optimization for that channel in particular. And we also have at play a number of other cost structure optimizations, specifically for the technology stack that our teams are all working on. So you'll see -- we're going to see the impact in Q1 but then sort of legging ourselves out of that and sort of sequential improvements in the gross margin and then ensuring that we're within the range for the year and the quarters.
Next question comes from Brian Schwartz from Oppenheimer.
I just have one. I wanted to ask you about the evolution of the partner channel becoming a sales channel. So thinking about the net new mix for fiscal year 2025, are you planning for any contributions from the partner channel?
Yes. So I'd first clarify that our partner relationships are still ones where we perform the sale directly in the vast majority of circumstances. And so when you think about Braze from a channel perspective, you should think about these as mutually beneficial relationships where we're delivering services revenue opportunities to our partners, both for integration and onboarding as well as for ongoing creative services, data analysis and ongoing implementation as they continue to expand to new use cases and new channels. But we certainly expect the source and influence pipeline from that partner ecosystem to continue to become more and more prominent as we move through the year. There's been a great upward trend as we look over the last frankly, over the last several years, but we've also seen it more markedly in the last few quarters. And we're excited about our future across that entire ecosystem.
Our next question comes from Michael Berg from Wells Fargo.
I've got one for Bill. You mentioned at the top of the call, mentioning IDFA and cookie defecating. Is that catalyzing potential changes in the MarTech software stack at a more meaningful clip than it has in the past? And I guess how would you stack rank what colors there's changes is more holistically? And does that look any different in net new versus experience?
No, I think my answer here is generally the same as the ground we just covered in response to the Gmail and Yahoo! changes with respect to sender reputation and IP pools. And the high level there is simply that those are instances of both -- and I guess the new part of this is that in addition to that, adding complexity to the landscape, which I think benefits Braze and gives people reasons to move over to a more modern way of doing customer engagement.
The changes that you referenced are also putting at a higher premium on first-party data. And so as brands continue to look at ways to replace the strategies that they were doing before, that depended on third-party data, many of them moved to first-party data first. And I actually have given a number of talks on this at our City by City event series over the last year about the 3 stages of first-party data investment that we see a lot of brands go through. The first stage is in response to things like the IDFA change or the cookie apocalypse or what have you, they keep trying to do things the way that they were before.
But suddenly, their third-party data sets are incomplete or they're legal or what have you or they're incorrect. So they try to replace that with first-party data. And that is, of course, effective, and you see that in features like our audience Sync product, where you can use first-party data to help manage your pay to add audiences and continue to maintain high levels of relevance and high levels of targeting efficiency even as some of those third-party data sets are harder to access. The second is then when you start to move into doing modern customer engagement, which is being able to leverage the first-party relationship that you have with the customer, use the first-party data to understand them better and then use customer engagement software to help shape their journey in a way that's more positive to you. That's where the vast majority of Braze customers are today. And then when you get to the third stage, you start to understand that those first-party relationships are not just an opportunity to talk to a customer but they're actually a platform under which you can innovate within your business.
And when I talked about that 8-figure contract where you've got different parts of the business that are operating together and they're doing so in a way that self-reinforcing, that's an opportunity that I think more and more businesses are going to be able to do on the back of investment in first-party relationships and first-party data. When you have an ability to understand your consumer and talk with them over a long time period, your ability is a business to put more products and services in front of them and to be able to leverage that first-party relationship as an asset in order to diversify your business continues to grow.
And that's one of the reasons that I'm so excited about the future braze's potential because I think we're still in the very early innings of that third stage of business model evolution. And more and more categories are waking up to the opportunities that they can create for themselves once they built out a first-party relationship interface with their customers, which, of course, with the advent of mobile and so much becoming digital, as we continue to move into the future, means that every vertical is going to have that opportunity in a way that many of them didn't experience before. And so when we talk about -- I mentioned Nestle Purina, as an example, that's a category that historically didn't have first-party relationships with their customers, but through subscription services and through other digitally connected products, they're starting to create the interfaces for those.
And that's causing them to rethink their entire product families in a way that they can actually build on top of the foundation of the first-party relationships and diversify their business model. So that, I think, is super exciting. What does that do this year? What does that do in the near term? I don't think it's discernible from all the other changes that we have that have continued to kind of modify the environment. But I think if you take a step back, and you look at those secular tailwinds, you look at that investment in first-party data and all the things that are driving people to really adopt the more modern customer engagement practices that those all point towards massive future opportunity for Braze.
Our next question comes from Nick Altmann from StochBank.
Awesome. Just to build on Ryan's question around that COVID renewal cohort. I guess I wanted to kind of take the flip side of it. And can you maybe just talk about how customers who have maybe signed shorter duration deals over the last couple of years, how those renewals specifically are trending? And you guys called out upsell was very strong this quarter. So maybe just kind of compare and contrast the sort of upsell dynamics with customers who are maybe on shorter duration deals, who may be signed when the macro was a little bit choppier versus that COVID renewal cohort?
Yes, it's a great question, especially in light of the results that we just shared because as you can see in the strong RPO results and Isabelle alluded to this, we did have a slight increase in our average overall contract length. And we are actually seeing customers who were really nervous about payment terms. They were really nervous about contract length, relaxing again and committing to longer-term contracts.
And I don't think we're seeing any material difference in renewal rates for people that were previously on 1 year or 2 year or what have you. But what we are seeing is upon renewal, more willingness for people to make longer-term commitments again to make more upfront payments to do so a little bit quicker. And we are seeing some of those parts of our motion revert back to more of what we've been used to over the last few years.
Next question comes from Yun Kim from Loop Capital.
Okay. Great. So just on the WhatsApp channel, it seems like that's ramping up pretty meaningfully. If you can remind us how the pricing works on that channel? And is that similar to like the SMS channel? And also is the adoption of WhatsApp channel were driven by existing customers? Or is this driving new logo adds, especially in your international market?
Yes. So the pricing is similar to SMS and e-mail in the sense that we bill for it on a CPM basis. And we -- and then similarly, any of the monthly active users that you are communicating with through WhatsApp that might be net new because of that channel are going to count against your MAU allotments. And so similar to our other premium channels, it monetizes in both ways.
In terms of upsell versus net new, it has -- it's been a great upsell channel because customers that are already running strategies on SMS or even push notifications, are able to quickly move those over to those channels. And of course, as we've spoken about so many times, all of the features that they're used to from a targeting and an orchestration reporting standpoint are available to them when they move to the WhatsApp channel.
The new business opportunities are also there, especially as you alluded to internationally. I would also call out, though, as Isabelle mentioned on the gross margin point, WhatsApp is a brand-new channel for us. And so with respect to our pricing versus the overall unit margin of that channel, we are still working to optimize that more as it grows as a channel for us, we will be able to commit to higher volumes and improve our own cost function on it.
And so that's some of the near-term pressure that you're seeing caused by that premium channel mix in, but it's something that we are confident we're going to be able to manage over time just as we've done with SMS and e-mail.
Okay. Great. A real quick question for Isabelle. Any change in the initial land deal side with new customers and how that's been trending?
Yes. No major differences there across the various segments. So obviously, continuing to see more strength in the enterprise. And so the land and an enterprise might typically be larger, obviously, than lands at SMB. But among the segments, there's no material change in the size of the lands. And again, we talked about this in the past. We tend to not worry about the size of the lands because once we're in, our ability to kind of show ROI and value then leads to the expansion strategy over time.
Our next question comes from Hannah Rudoff from Piper Sandler.
Just one for me here. So full year growth outlook of 21.2% is comparable to your initial guidance during last year, which does suggest that demand is stabilizing. We spoke to this in the previous question. But just wondering, what are the products and partnerships that could be most likely [indiscernible] for upside this year?
I mean I think it's a lot of the things that we've spoken about so far on the call. We're definitely excited about the agency ecosystem and the global systems integrator ecosystem being able to continue to source and influence new pipeline. We're excited about the rebrand and the investments that we've put into marketing at the beginning of the year. the expansion of sales capacity as well, bringing new heads into the sales organization in new geographies as well.
And then we've got great new products that we're able to monetize both for our existing customers who can cross-sell and upsell as well as provide new starting points for net new business, as was just alluded to in -- on that WhatsApp question. And so I think across the board, we're excited about a lot of different things contributing to what's going to be a good year.
Our next question comes from [ Cole Erskine ] from TD Cowen.
Great. Just one for me. Bill, I was wondering if you could give us an update on efforts to kind of sell into product teams and data teams and target incremental budgets that are outside of the core marketing that you usually target?
Yes, absolutely. So I'll break those apart because when we look at from a data perspective, I think we are so far not selling a lot to data teams, but we are making their lives easier. And what that's doing is it's getting more data into Braze, more quickly with lower total cost of ownership and it's enabling marketers to run more use cases in Braze and expand into new channels and new message volumes and just generally increase their usage of Braze.
And so we very much view data as an input into Braze, and it's 1 that we want to make sure gets to us quickly and easily. It's why you're seeing so much investment. So broadly, we're still very committed to our partnerships across the entire data ecosystem as well as building out things like our data transformation capabilities and cloud data ingestion. And all of those are working to try to make data science teams lives easier, both that integration and onboarding as well as on an ongoing basis as they continue to work with Braze over time.
On the product side, you're continuing to see us expand with new capabilities like feature flags, we also are working on more in product capabilities like landing pages. Our content cards are getting more flexible. The surveys capability continues to get more powerful. Those are all channel expansions that are some of those, you maybe wouldn't think of as a traditional marketing channel. We refer to them as channels because orchestrating them in the same way, and there are actions that are being taken by Canvas that impact the user experience.
And I think that if you want to kind of think about where the ownership of those things are, if they're impacting the user experience in the product and affecting the product behavior, we're targeting those more product and engineering buyers, whereas channels that are more traditionally owned by CRM teams, you would probably call the marketing buyer. But broadly, we think of all of this as customer engagement.
And if you go back to some of the comments I made earlier about the role that we have to play to be a companion to the customer as they move through their journey interacting with the products and services of the brands that we work with to be a companion we need to be in the product experience just as much as we are in the traditional marketing channels. And that's something that we're committed to and we're excited to see our customers adopting.
We have time for one more question. Our final question will come from Taylor McGinnis from UBS.
So it sounds like there's noise in the net customer adds number. So is Bill, any color you can provide on what you're seeing in terms of new logo ARR growth exiting and starting the year? And how we should think about the potential trajectory path for that this year?
Yes. So the new logo adds for the quarter was not dissimilar or logos when you think of order forms was not dissimilar from what it's been historically. So the number that you're seeing is sort of muted for 2 reasons. One is we were very strong in Q4 in terms of upsell. And so a lot of those net new order forms were done in the context of larger enterprises where you can penetrate a new geography, a new business unit, et cetera. And so you're not seeing kind of all of the new order forms that are there.
And then churn, as I mentioned, at the lower end of the contract sizes down at the SMB was still challenged. And so that sort of took the number down as well. But when we look at the evolution of net new order forms, so that is new contracts with new counterparties, I won't say customers, it's just a new counterparty. That actually was not dissimilar from trends that we have seen in the last couple of quarters. So that was more normalized. It was really more that it's more concentrated in the enterprise and therefore, more upsells in the context of existing parent companies and then obviously the churn of the SMB level worked against us.
There are no more questions in the queue.
All right. Yes. Thank you, everyone. We're excited about the year ahead and looking forward to chatting with you again in a few months.