Braze Inc Q3 2025 Earnings Call Transcript

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

Question: Ryan MacWilliams - Barclays - Analyst : Hey, thanks for taking the question. Bill would love to hear more about project catalysts if well, this will be included as a part of canvas or be a separate add on and then maybe if you aren't charging for it discreetly, how do you think this can be additive to praise the results next year? Thanks.

Question: Ryan MacWilliams - Barclays - Analyst : Excellent. And one for Isabel, how should we think about the dollar based net retention rate within the third quarter itself? And I know we're still going through some of the renewals, but any update on how we should think about the dollar based net retention rate from here, next.

Question: Ryan MacWilliams - Barclays - Analyst : Excellent, appreciate the color. Thanks guys.

Question: Gabriela Borges - Goldman Sachs - Analyst : Hi, good afternoon. Thank you, Bill. I wanted to ask about some of the improvements that you've been making with your go to market and sales and marketing productivity. Maybe just level set us on how some of your new initiatives are going. I remember you talking about time credits -- not time credits but module credits. I remember you talking about ways to improve engagement within the platform and customer success. So would love to hear it taking a step back how some of those initiatives are going. Thanks.

Question: Gabriela Borges - Goldman Sachs - Analyst : Absolutely. I'll ask one follow up on the go to market, which is specifically around the Braze for startups and the free trial programs for smaller companies. And maybe as part of that -- maybe give us an update on the health of that small company ecosystem as a whole. Thank you.

Question: Gabriela Borges - Goldman Sachs - Analyst : That makes sense. Thanks for the call.

Question: Tyler Radke - Citi - Analyst : Hi, good evening. Thanks for taking the question. Bill, you talked a lot about project catalysts and I'm wondering if you could just sort of frame how you're seeing the conversations just around agentic AI in front office evolve. Obviously, you have Salesforce out there talking a lot about agent force. I know you did talk about a lot of competitive takeaways being strong in the quarter. But what role are customers sort of viewing, Braze in those contexts? And do you think the focus on, agentic AI the kind of the incumbent front office providers sort of helps or hurts your competitive win rates over time? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 9:30PM, BRZE.OQ - Q3 2025 Braze Inc Earnings Call

Question: Tyler Radke - Citi - Analyst : Great, thanks for all the detail Bill. Follow up for you, Isabel, as we look at bookings in the quarter, both bookings and billings, they reaccelerated from about 15% to call it 22%, 23%, yet, the implied Q4 guidance suggests something in the 10s, 18%, 19%. So can you help us understand, was there was there any timing benefits in that bookings performance or how should we just think about, the run rate of current RPO relative to that, that guide for Q4.

Question: Tyler Radke - Citi - Analyst : Thank you.

Question: Scott Berg - Needham & Co. - Analyst : Hi, everyone. Nice quarter. Thanks for taking my questions. Bill, I wanted to focus on something that you said earlier in your scripted remarks around existing Braze customers, when they go to a new company, you're seeing them kind of re buyer. I guess when you look at those customers, do they purchase the platform any differently than the new customers. Just trying to understand what that buying trend for AI season embrace customer.

Question: Scott Berg - Needham & Co. - Analyst : Got it. Very helpful Bill, thank you. And then, Isabelle if you look at your non-GAAP profitability in the quarter or non-GAAP operating margin, that you've got it to in the fourth quarter, you're crossing over the chasm. How do we start thinking about profitability versus growth going forward? I know you all are very focused on -- now that you've hit this and I know you're not getting for fiscal '25 or '26 obviously. But do we see this kind of like a plateau for a period of time or can we get it through margin expansion you can forward if growth and demand remains at the range that we have.

Question: Pinjalim Bora - JPMorgan - Analyst : Great. Thank you for taking the questions, Isabelle just one for you. Any way to understand, when does the last cohort of the preserve or kind of cohort renewals flush through the system? It seems like you had a little bit of a stability on in quarter, but trying to understand if 110% is the trough at this point can go to a single digit number.

Question: Arjun Bhatia - William Blair - Analyst : Perfect. Thank you very much. Bill maybe one for you just as you're talking to customers and discussing plans with them for next year. What is your sense on the overall spending environment as it relates to marketing budgets? And I think you've highlighted a couple of times in your prepared remarks that the replacement cycle remain strong with the focus on AI and first party data and cloud data warehouses. Why could that replacement cycle not accelerate further next year as more folks look to up level their marketing stacks? Thank you.

Question: Derrick Wood - TD Cowen - Analyst : Great, thanks. I'll direct it to you, Isabel. What are you guys saw some very large upside and operating income. This quarter was solid with about $2 million of upside, but the last quarter was like $11 million. So, could you just talk about the puts and takes on margins and investment focus this quarter versus last quarter or maybe what were some of the variances you would flag including on the gross margin side? Thank you.

Question: Taylor McGinnis - UBS - Analyst : Yeah, hi. Thanks so much for taking my question. Maybe just that Isabelle for you. So just to clarify when we think about the in period NRR in the quarter and the stability that you talk -- that you mentioned. So with that, I guess around like 110% similar to what it was last quarter. And then as a follow up as we think about NRR and 4Q, could you just maybe walk us through the puts and takes of that? It sounds like on one hand, you guys are seeing good traction with messaging volumes from the holiday and obviously it's your biggest renewal quarter, but on the flip side, maybe there are still some customers out there that are right sizing or not expanding to the degree that you'd like to see. So I guess one, what are the drivers behind some of the cautiousness in near term? And what do you need to see in the demand environment, to get comfortable that we're closer to the bottom.

Question: Yun Kim - Loop Capital - Analyst : Okay, great. Thank you. I have a quick question. Bill, can you just give us some update on the partner ecosystem? Not just with global system integrators, but also perhaps OEM opportunity with the other IS feeds out there.

Question: Brian Peterson - Raymond James - Analyst : Hey guys, thanks for taking the question. So you gave some really healthy stats on activity for in-app and content cards. As we think about what's pushing that activity through those channels, how do we think about the balance of upsell via higher volumes or Croda a new channel? Any perspective there?

Question: Nick Altmann - Scotiabank - Analyst : Awesome. Thank you. I wanted to circle back to Tyler's questions around bookings. Isabelle, you historically talked about how roughly third of your net new ACVs typically booked in the fourth quarter. And so I was just wondering if you could provide any update on whether that same linearity applies for this year. Thanks.

Question: Michael Berg - Wells Fargo - Analyst : Hi, thanks for taking my question. I want to get one for Isabelle here. You talk about some strength on the Black Friday, Cyber Monday period and I was talking about the poster customers showing some strength or compressing the expansion relative to the zero interest rate customers. As we enter into the New Year where it looks like interest rates are coming back down and coming out of a period of a strong holiday shopping season. How can we think about how and customers are thinking about their spending here? And is there a reason to believe the expansion rates could meaningfully accelerate as rates come down next year? Thanks.

Question: Brian Schwartz - Oppenheimer - Analyst : Yeah. Hi. Thanks for taking my question. Bill, I wanted to just ask you about the impact you're seeing in terms of either sales cycles or deal sizes from all the AI data and orchestration product enhancements that you've announced this year. I know you announced some of them earlier this REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 9:30PM, BRZE.OQ - Q3 2025 Braze Inc Earnings Call year. And then you had a lot of new product enhancements announced at Forge. Are you seeing what is that doing the sales cycles? Is it -- are you driving more opportunities with them or is it making the deals bigger? And then maybe just kind of the follow up the big question on Q4 because clearly that is the biggest bookings quarter for the company. Sounds like the macro hasn't changed much at this point. But how are you thinking about that specifically in Q4 and in kind of anticipating that type of selling season? Thanks.

Question: Parker Lane - Stifel - Analyst : Hi team. Thanks for taking the question here. Bill maybe just to follow up on the last one. If we get into a better demand environment out there and budget starts to unlock a little bit. What is the right balance of legacy vendor replacement versus more point solution consolidation or BC takeaways?