Braze(US:BRZE)2022-06-14 02:35Financial Data and Key Metrics Changes - The company reported Q1 2023 revenue of $77.5 million, representing a 62% year-over-year increase and a 10% increase compared to the previous quarter [8][44] - Dollar-based net retention was 127% overall and 133% for customers spending at least $500,000 annually [8][47] - Free cash flow generated was nearly $16 million, driven by strong bookings from Q4 [9][54] - Non-GAAP gross profit was $52.5 million with a gross margin of 67.8%, an improvement from 67.4% year-over-year [50] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 94% of total revenue, with the remaining 6% from one-time fees and professional services [44] - The total customer count increased by 50% year-over-year to 1,503 customers, with large customers (spending at least $500,000 annually) growing by 65% to 129 [45] - The remaining performance obligation rose 57% year-over-year to $391 million, indicating strong business momentum [49] Market Data and Key Metrics Changes - Revenue outside the U.S. contributed 41% of total revenue, up from 40% in the previous quarter [48] - The company continues to see growth across various verticals, particularly in financial services, gaming, and quick-service restaurants [17] Company Strategy and Development Direction - The company aims to capitalize on the growing market for customer engagement platforms, emphasizing customer-led growth strategies [10][42] - Braze's technology is designed to facilitate a customer-centric approach, allowing businesses to harness first-party data effectively [15][22] - The company is focused on expanding its product offerings and enhancing customer engagement through innovative solutions [27][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's outlook despite macroeconomic volatility, emphasizing the importance of customer engagement in challenging environments [42] - The company believes that its services will remain a priority for customers, even during economic downturns [43] - Management highlighted the necessity of customer engagement as a significant market opportunity that remains under-penetrated [43] Other Important Information - The company has expanded its workforce by over 120 employees in the quarter, bringing the total to over 1,280 [25] - Braze has launched next-generation SDKs for web, iOS, and Android to improve performance and developer experience [26] Q&A Session Summary Question: How are new customers thinking through the cost and implementation process required to move to Braze? - Management noted that customers are focused on maximizing ROI from acquisition investments and improving retention rates, with no significant shift in priorities observed [61][64] Question: How should investors think about MAU growth within Braze's customers and its impact on net retention? - Management confirmed that monthly active users (MAU) remain a significant component of revenue and will continue to drive dollar-based net retention [66][68] Question: Can you parse out marketing use cases versus customer engagement use cases? - Management emphasized that both marketing and customer engagement use cases are integrated and that the focus is on maximizing retention and lifetime value [70][75] Question: How durable are direct-to-consumer tailwinds in the current environment? - Management indicated that while some D2C brands are facing challenges, many are focused on building enduring customer relationships and are not solely reliant on short-term growth tactics [90][92] Question: How much operating flexibility does the company have in the current macro environment? - Management expressed confidence in their ability to respond to changing conditions, noting that they are executing their growth plan effectively [93]