Braze Inc Q2 2025 Earnings Call Transcript

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

Question: Ryan MacWilliams - Barclays - Analyst : Thanks for the taking the question. Bill, with Apple supporting RCS in iOS 18, have you seen any customer interest yet on RCS? And how could you see this as a channel for Braze since RCS seems more complex than SMS and it has the ability to be more personalized for individual users? Thanks.

Question: Ryan MacWilliams - Barclays - Analyst : Excellent. Appreciate the color. Then for Isabelle, how should we think about member retention for the rest of this year? Do you feel like we're at the right level at this point? And was there any impact to this metric based on the acquisition from a year ago? Thanks a lot.

Question: Ryan MacWilliams - Barclays - Analyst : Make sense. Appreciate the color, thanks.

Question: Pinjalim Bora - JPMorgan Chase & Co - Analyst : Thanks for taking the question. Bill, maybe you touched on the legacy Marketing Cloud replacement cycle. Maybe talk about how often is AI or your road map around AI has been cited by customers in these deals as kind of a point of differentiation? And is the intensity there in terms of the displacement cycle? Are you seeing that increase recently or are people holding on more to their incumbent solution given the challenging macro?

Question: Pinjalim Bora - JPMorgan Chase & Co - Analyst : Understood. Thank you very much. One question for Isabelle. And maybe you as well, Bill. Maybe talk about the macro environment tactically versus business last quarter. When I look at the numbers, it seems like NRR took a bigger step down this quarter sequentially. Some of the bookings numbers RPO-based, CRPO-based seems like slowed a bit. So wanted to hear if the macro environment, do you feel like it took a step down? Or are there some other dynamics maybe Isabelle can talk about on the deferred revenue side, which kind of sequentially seems like it's more of a drag down this quarter than previous Q2?

Question: Pinjalim Bora - JPMorgan Chase & Co - Analyst : Understood. Thank you. 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 05, 2024 / 8:30PM, BRZE.OQ - Q2 2025 Braze Inc Earnings Call

Question: Gabriela Borges - Goldman Sachs - Analyst : Hi, good afternoon. Thank you. Maybe I'll ask the normalized growth question, which is let's assume we're in a similar macro environment. How do you think about some of the company-specific initiatives that you're introducing the start-ups in free trial? And then the sales and marketing productivity improvements you're making. If you think about everything in our gate, how do you think about the potential for the business to reaccelerate over, let's say, the next 12 to 18 months? Thank you.

Question: Gabriela Borges - Goldman Sachs - Analyst : Yeah. That makes a lot of sense. And Bill, maybe on the question up Frontiers, and specifically on product frontiers, remind us a little bit on how you're thinking about the next milestones on the product road map. Not just in your core market of marketing, but also maybe more broader than that. How do you think about your journey to being even more dominant across adjacent categories over the long run as well? Thank you.

Question: Gabriela Borges - Goldman Sachs - Analyst : Excellent, thanks Will.

Question: Arjun Bhatia - William Blair - Analyst : Yeah, can you hear me, hello? 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 05, 2024 / 8:30PM, BRZE.OQ - Q2 2025 Braze Inc Earnings Call

Question: Arjun Bhatia - William Blair - Analyst : Okay, perfect. Hi. Thank you. Bill, for you. Can you touch on the Braze data platform and the role you think it might end up playing in just delivering additional value to customers? And how you might end up monetizing that and for customers that have existing cloud data warehouses? Is this meant to be a replacement? Is it complementary to that? Like what role does it frame the overarching data stack for your customers?

Question: Arjun Bhatia - William Blair - Analyst : Okay. Helpful. And then when I look at your results, I think it seems like the enterprise is doing very well. We're getting more and more eight figure customers, your primary care customers are going up and there seem to be maybe some headwinds out in the business. 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 05, 2024 / 8:30PM, BRZE.OQ - Q2 2025 Braze Inc Earnings Call When you just think about it internally from a resource allocation perspective, as it relates particularly the go-to-market, are you making any changes to maybe lean in one place over another to maybe few on the fire on the FI side? Like how are you thinking about that internally to maximize your growth potential in this macro environment?

Question: Arjun Bhatia - William Blair - Analyst : All right. That's it. Thank you. 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 05, 2024 / 8:30PM, BRZE.OQ - Q2 2025 Braze Inc Earnings Call

Question: DJ Hynes - Canaccord Genuity - Analyst : Hey, guys. Thanks for taking the question. A couple of follow-ups, actually, Bill, to some of the answers you just gave As I think about kind of the positioning for Braze, like in many ways, I think of you guys is acting a lot like a CDP for customers, right? Just kind of obviates the need for a third-party vendor to be in there. But then I hear the list of like the launch partners for the data platform, and there are a number of CDP guys in there. Can you just help me anything like when a customer might need a CDP? When they might not like what dictates that difference? I mean, I would think that CDP what might be one of those point solutions that you guys could consolidate. So just help me think through that?

Question: DJ Hynes - Canaccord Genuity - Analyst : Yeah. Okay. That makes a ton of sense. That's a helpful explanation. And then just going back to the free trial, like can you give me some color on the depth of platform capabilities that a trial customer might be realized in 14 days? I mean it's a narrow window. When you talk about technical decision makers, just trying to think about the potential effectiveness of that program?

Question: DJ Hynes - Canaccord Genuity - Analyst : Yeah. Very clear. Okay, great. Thanks, guys.

Question: Ashley Kim - Citigroup - Analyst : Hi, thank you. This is Ashley Kim on for Tyler. Maybe a question for Isabelle. On the gross margins, apart from the personnel and tech stack efficiencies, would there be anything call-out? And do you see that level of improvement being sustainable through the balance of the year? 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 05, 2024 / 8:30PM, BRZE.OQ - Q2 2025 Braze Inc Earnings Call

Question: Ashley Kim - Citigroup - Analyst : All right, thank you. I'll go back in the queue. Thank you.

Question: Scott Berg - Needham & Company - Analyst : Hi, everyone. Nice quarter here. Bill, you mentioned very briefly, I think it was to Ryan's question about your new credit strategy within premium messaging platforms. It's only been a couple of months since you made that change. I guess what are you seeing across buyer behavior in trying to buy and hopefully expand channel usage into different countries so far with the new strategy?

Question: Scott Berg - Needham & Company - Analyst : Very helpful. Thank you for taking the question.

Question: Brent Bracelin - Piper Sandler - Analyst : Thank you. Good afternoon. Isabelle, I don't want to overlook the first quarter profitability here 6 months ahead of our model, fantastic to see. My question really is around new customer activity. It sounds robust even in a tough macro. How is the vendor consolidation appetite impacted the size of land? I know historically, you'd land may be smaller with a large brand and then gain share over time. Is that starting to change now? Are you seeing maybe larger land opportunities show up in pipeline just given the legacy replacement narrative you're talking about? Thanks.

Question: Brent Bracelin - Piper Sandler - Analyst : Sounds good. Great to see profitability. Thanks.

Question: Derrick Wood - TD Cowen - Analyst : Great. Thanks. I guess, either one of you guys, just -- could you touch on the relative strength across verticals, which ones are healthier, which ones maybe seeing more pressure or just any notable change in demand across any particular vertical? And then it seems like international growth has been a bit stronger than US. Could you kind of compare and contrast domestic versus international and why international may be on a bit of a stronger trend? 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 05, 2024 / 8:30PM, BRZE.OQ - Q2 2025 Braze Inc Earnings Call

Question: Derrick Wood - TD Cowen - Analyst : Understood. Thank you.

Question: Nick Altmann - Scotiabank - Analyst : Awesome. Thanks, guys. Just to build last question on international. Is there any meaningful difference in the land versus the expand side international versus domestic? And then when you look at sort of the international customers, how does sort of their buying propensity compared to the US market in terms of the willingness to replace legacy systems? Thanks.

Question: Nick Altmann - Scotiabank - Analyst : Great. Thank you.

Question: Brian Peterson - Raymond James - Analyst : Sorry, guys. I got caught by that view button again. So Bill, great to see the expansion of the eight figure customers. I'm curious if there's any commonality in what drove that in terms of volume, channels, new geos, any perspective there would be helpful. Thanks, guys.

Question: Brian Peterson - Raymond James - Analyst : Great to hear. Thanks, Bill

Question: Matt VanVliet - BTIG - Analyst : Great. Thanks for taking the question. I guess, around the free trials, any impact that you're expecting to have on overall deal sizes for new customers? And then maybe more importantly, on the expansionary capabilities within existing customers. Do you think this speeds things up or just maybe gets into other areas and use cases that maybe were a little hesitant to spend budget when they can get their hands on the product immediately and then make a decision?

Question: Matt VanVliet - BTIG - Analyst : Thank you.

Question: Michael Berg - Wells Fargo - Analyst : Hey, thanks for taking my question. A quick one for either one of you guys here. How do you expand more data capabilities and with your platform being entrenched in data? We refer to notes of you winning some deals within enterprises data budgets or data initiatives. Is that something you're seeing a trend? Or are those more one-offs? Or how can we think about potentially winning deals via data budgets?

Question: Michael Berg - Wells Fargo - Analyst : Helpful. Thank you.

Question: Yun Kim - Loop Capital Markets - Analyst : Okay. Any noticeable change in the channel mix that you're seeing out there or you're expecting in the second half as the international channels or international business continues to grow faster? And also, is the macro driving the channel mix back towards more lower-priced channels like e-mail? Thanks.

Question: Yun Kim - Loop Capital Markets - Analyst : Okay, great. Thank you so much.

Question: Taylor McGinnis - UBS - Analyst : Perfect, thank you. This is Taylor McGinnis. Isabelle the NRR number you report is on a trailing 12-month basis, it's tough to get insight into what might have happened in the quarter. So can you provide more color in terms of the in-period NRR that you might have seen? And if there were any changes in gross churn? And then as that relates to the renewal base in the quarter, were there any larger optimizations or slower net upsells to flag that might have weighed on that? Thanks.

Question: Taylor McGinnis - UBS - Analyst : Great. Thank you. 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 05, 2024 / 8:30PM, BRZE.OQ - Q2 2025 Braze Inc Earnings Call