Braze(US:BRZE)2023-12-07 05:22Financial Data and Key Metrics Changes - Revenue for the third quarter increased by 33% year-over-year to $124 million, with a contribution of approximately $3.5 million from the North Star acquisition [26][39] - Non-GAAP gross margin improved by 170 basis points year-over-year to 71.4%, driven by personnel efficiencies and cost optimization [84] - Non-GAAP operating loss was $8.9 million, an improvement from a loss of $17.3 million in the prior year quarter [61] - Cash used in operations was $2 million, significantly reduced from $23.9 million in the prior year quarter [31] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 95% of total revenue, with dollar-based net retention at 118% overall and 121% for large customers [57][58] - The total customer count increased by 17% year-over-year to 2,011 customers [27] - The number of large customers spending at least $500,000 annually grew by 28% year-over-year to 189, contributing 58% to total annual recurring revenue (ARR) [82] Market Data and Key Metrics Changes - Revenue outside the US contributed 44% of total revenue, up from 43% in the prior year quarter [28] - Total remaining performance obligation was $560 million, up 37% year-over-year [83] Company Strategy and Development Direction - The company is focused on product innovation and driving operational efficiency, with plans to achieve positive non-GAAP operating income and free cash flow by the end of fiscal year 2025 [89] - The strategy includes capitalizing on the legacy vendor replacement cycle and vendor consolidation trends [43][146] - New product innovations unveiled at the Forge conference include low-code and AI-driven features aimed at enhancing customer engagement [19][54] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains uncertain, but customer engagement is viewed as a business imperative, especially during challenging times [16] - Management expressed confidence in the company's ability to grow despite macroeconomic headwinds, emphasizing the importance of efficiency over growth in current budgets [70][104] - The company anticipates continued demand for customer engagement solutions, although sales cycles are elongated and marketing budgets are constrained [86] Other Important Information - The company hosted its annual flagship customer conference, Forge, which attracted nearly 4,000 attendees and showcased best practices in customer engagement [11][41] - The company made its first commitment to a virtual power purchase agreement as part of its climate commitment [25] Q&A Session Summary Question: Can you discuss deal sizes and enterprise traction? - Management noted challenges in the SMB segment, with elevated logo losses but overall dollar losses within budget tolerances. Enterprise traction remains strong due to longer planning horizons [68][70] Question: What are the trends in renewal conversations? - There are more renewal dollars expected in Q4, with bookings showing better-than-expected linearity [80] Question: How are existing enterprise customers approaching next year's budget? - Management indicated that marketing budgets remain flat or constrained, with CFOs scrutinizing expenditures [103] Question: What drove the upside in Q4 guidance? - The upside was attributed to better linearity and execution in a challenging macro environment [117] Question: How did the Forge event perform in terms of pipeline generation? - The event helped accelerate deals and improve customer relationships, with a focus on AI capabilities [125][156]