Braze Inc at Goldman Sachs Communacopia + Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : I'm going to ask you to do this without a whiteboard.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : Which is, we really do appreciate your background at Bridgewater originally. And the analogy that compares Braze to a high-frequency trading system, focus about when you were first building the architecture that comprises the core of Braze. What is it that makes it like a high-frequency trading system? And why was it had to build? What were the 1 or 2 big technical problems that you had to solve to be able to get up and running?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : And so if we think about the main players in the marketing software and marketing automation stack today, what is the technical limiter or the barrier to entry for them to take a team of R&D folks, put them on top of their batch processing architecture and turn it into a real-time stream processing architecture?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : There is also noise in the market or a misconception in the market where you have competitors who claim they can do real-time use cases when perhaps, when you actually demo to the customer or bake off to the customer, the functionality of the technology is different from yours. Where do you think customers are in the evolution of understanding how Braze is different? And what can you do to help with that evangelization? Or do you think we're kind of past the evangelization stage?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : I'll pick up on the comments on being early, which is a little bit of a product road map question. If you think about your most sophisticated customers and how you're thinking about your road map over the next 5 years, what are the 1 or 2 next biggest technical problems that need to be solved as you think about the next phase of this?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : I'll pick up on this idea of meeting a customer where they are. As we think about the last couple of years, COVID, I think, has been a catalyst for folks to think about digital engagement. IDFA has happened, which has catalyzed the conversation around first-party data versus third-party data. What do you see as the trigger for customers to begin an initial engagement with Braze? And is there a risk that we're in a period of slower triggers because we've had so many triggers over the last years?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : It's very dramatic.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : I want to marry the idea that you put out there on customer acquisition costs becoming harder and that being a catalyst use Braze. With the comments that you made on Monday night, which specifically related to customers being more risk averse about making changes in their marketing stack. So help us reconcile those 2 comments and talk a little bit about what you're seeing real time, which led to ultimately the implied 4Q guidance coming down a little bit?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : It's interesting that you clarified that broad-based means not necessarily tied to the marketing budget. One of the observations we have is marketing companies, marketing software companies and front-office software companies tend to trade at a discount on gross-adjusted revenue multiples because of investor correlation, or investments correlating the health of their businesses to marketing budgets. And so the question for you specifically is, do you think Braze is tied directionally to the strength of marketing budgets in any given year based on your customer conversations? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 14, 2022 / 5:00PM, BRZE.OQ - Braze Inc at Goldman Sachs Communacopia + Technology Conference

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : I will ask a clarifying question on the broad-based risk of business comment that you made earlier, which is, can you share with us anything about the rate of change? Meaning, have conversations stabilized in terms of being more risk averse but stable, or is there a trajectory where the risk averseness gets more severe as we go through the year?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : I'm going to ask on go-to-market and margins, and then we will open it up to the audience. So I'll combine the questions into one, which is, I think the #1 driver for you to get to free cash flow positive, EBIT breakeven is leverage in your go-to-market line. So 1 or 2 things that we should be aware of as you think about driving efficiency in your go-to-market, especially given you have competitors who have below average LTV to CAC, but spend a lot of money in the space.

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : Excellent. Questions from the audience? Bill, will you share with us your view on consolidation in the space? Do you think, 5 years from now, the number of players with critical mass in marketing software, customer experience, customer engagement will be more or less similar to today?

Question: Gabriela Borges - Goldman Sachs Group, Inc., Research Division - Analyst : We'll leave it there. Thank you for your thoughts. Thank you for your time. We appreciate it.