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The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with U.S. GAAP. And now I'd like to turn the call over to Bill.

Bill Magnuson: Thank you, Chris, and good afternoon, everyone We're very pleased with our first quarter performance, which again demonstrated the power of the Braze customer engagement platform, even against the challenging macroeconomic background. We got off to a great start to the year, generating $101.8 million in revenue, up 31% versus the prior year, while driving operating efficiency in the business. Non-GAAP gross margins increased 100 basis points year-over-year and we demonstrated strong leverage with non-GAAP operating margins improving by over 700 basis points compared to the first quarter of last year. We also generated record free cash flow of $21.7 million, driven in part by solid fourth quarter bookings. As we progress through fiscal 2024, we plan to continue driving strong top-line growth while maintaining cost discipline and believe we are well on our way to achieving the near and long-term profitability goals outlined on our fourth quarter call in March.

Brands continue to recognize the high ROI that can be achieved through personalized cross-channel customer engagement enabled by the Braze platform. In the first quarter, we increased our total customer count by 96 sequentially to a total of 1,866 continuing to win against both legacy Marketing Clouds and Point Solutions with our best-in-class customer engagement platform. Recent new business wins and upsells included Procore Technologies, Sonos, Sweetgreen, and Swimply, among many others. We continue to realize strong growth across multiple customer classes, geographies and verticals with both retail e-commerce and media and entertainment showing particularly strong year-over-year growth during the period. Braze again benefited from vendor consolidation this quarter and we believe this trend will continue as enterprises with ambition and sophistication consolidate our technology ecosystem with modern omnichannel customer engagement solutions like Braze.

We further believe that both the legacy replacement cycle and this vendor consolidation trend will accelerate as customers look to capitalize on new AI-driven advancements in customer engagement, an area of innovation, which benefits tremendously from the breadth of Braze's data footprint and messaging flexibility, as well as our real-time stream processing architecture. As I mentioned on our fourth quarter earnings call, existing at the leading edge of technology is in our DNA and at the core of our innovation roadmap. Braze is a company that perceives the opportunity presented by the coming wide-scale adoption of mobile more than a decade ago. And since then we've worked relentlessly to seize that opportunity through the use of sophisticated technology.

For years Braze's had dedicated teams of data engineers and data scientists, focused on using machine learning to build AI into our product, with the goal of making marketers more effective and engaging their end users by optimizing customer journeys, generating more relevant content and enhancing targeting strategies. Even more importantly, we believe that the ability to use machine learning and generative AI are as fundamental to being a software engineer as using databases and writing secure code. As new technologies emerge, including but not limited to breakthroughs in artificial intelligence, our forward-looking R&D posture and highly extensible foundations allow us to quickly deliver innovation to our customers. You can see this track record in not only our long history of activating real-time first-party data through stream processing, but also with AI, including generative AI more recently.

Braze debuted a GPT integration for email subject line generation over a year ago and we were early to integrate generative AI for images into the message composition experience, launching a dashboard integration with Dolly last December. More recently, we launched a message content checking tool, built on top of GPT4, helping marketers to avoid copyrighting mistakes, the accidental sending of text messages or sending culturally insensitive content. We're also testing a wide array of new capabilities including generating SQL for advanced segmentation and reporting use cases, automatically suggesting improvements to message copy during composition and even an adversarial AB testing simulator that we believe may be able to generate and predict winning message variants for populations before a campaign is even launched.

Photo by Danial Igdery on Unsplash

Customers have been successfully using both our AI copyrighting assistant and automatic image generation for months to generate message content and inspire new engagement strategies. Lowering the burden of content creation while also serving as an in dashboard news encourages customers to bring new use cases into Braze more quickly, while also expanding their usage of the powerful experimentation features native to Canvas, our proprietary, no-code visual development environment. We believe this enhanced agility and reduce burden to test new ideas, further combines with our other machine learning driven experiment optimization capabilities, further compounding the ROI we deliver to our customers. We know from our customer base that even small or one person teams can still accomplish a lot with Braze and as a company that has never charged for seats, we expect to see generative AI-driven productivity enhancements for individual marketers translate into even more Braze usage over time.

We believe this will further cement our stickiness and promote expansion into new user populations, driving higher message volumes and the adoption of more channels. Internally, we talk a lot about smoothing the on-ramp into Braze as a key part of ensuring that the differentiation presented by Braze's sophisticated capabilities remains broadly accessible to our ever-growing market, even to those who are early in their journey of adopting the modern practice of customer engagement. Over the last five years, we've seen an acceleration of two trends that highlight the importance of tackling this challenge, which also translates into a deeper moat for Braze's technology and our customer community. First is the rising imperative of collecting first-party data and making it available in real-time to engagement systems.

And second is the increased ROI of tightly coordinating customer engagement with the product journey, often including the delivery of messaging directly inside the product experience. Both of these trends mean that the customer engagement professional who expands their traditional marketing skill set to include a deeper understanding of data analysis, product design and basic coding will find themselves generating higher ROI for their brand and advancing more quickly in their career. Braze's customer education and community investments are designed to help more marketers make this transition and we believe that the integration of generative AI into our platform and the pairing of AI with our Canvas environment more broadly will compound these efforts by further smoothing the on-ramp into Braze for our new customers, while encouraging the use of our advanced targeting personalization and experimentation capabilities for those that are already familiar with Braze.

All of this is a continuation of a central principle of our product strategy, which is that immense value can be created when you place the power of programmability and data directly into the hands of those who are closest to the customer journey and brand promise. It's why we built Canvas and it's why we continue to view it with not only additional power and flexibility but also with enhanced usability and collaboration tools. And of course, generative AI isn't the whole story. Preceding these features has been a robust collection of automated decision-making techniques, using both machine learning and advanced statistical methods, including our Predictive Suite, Intelligence suite and a personalized varying capability integrated into the Canvas.

Some of these features are already monetized directly through premium add-ons, while others are provided as part of our standard offering, a blended approach that we anticipate continuing as we release more AI features over time. All of these capabilities are integrated deeply into Braze's data flow and execution SAC, and represent early examples of what we believe will be an area of enduring differentiation for Braze. Underlying them is our differentiated architecture which distinguishes Braze from our competitors in three key ways. First is our comprehensive data flow and messaging capabilities. Last fiscal year, Braze processed over 13 trillion data points and sent over 2 trillion messages, all with our real-time stream processor. Customer data flows into Braze across our customer's data ecosystems, inclusive of direct integrations into their products and their data warehouses.

We are also integrated into a wide array of consumer touchpoints and end user product interfaces, which enables us to take action across many channels. The inputs AI and the direct outputs from its decisions are both more flexible and comprehensive with Braze and the added value this represents is a key component of our ongoing success with vendor consolidation. Next is real-time execution. Our ability to ingest and act on newly generated data in real-time means that AI and Braze is able to make better decisions faster. Braze already employs multiple machine learning and statistical methods to enable automated decision-making in real-time within Canvas and we're experimenting with custom transformers for automated product recommendation that will be able to inject the outputs of generative AI into message content on a per user basis.

Third is our focus on experimentation and programmability. Building on Canvas's flexibility and strengthening experimentation, we'll continue injecting both AI/ML and statistical techniques for automated decision-making into an increasing number of decision points throughout the user journey, enabling new AI techniques to be tested against existing manual strategies and again subsequent enhancement to our AI-driven methods. It's an incredibly exciting time to be leading a team as innovative as Braze in a market with as much potential as customer engagement. And even as we approach our 12-year anniversary this summer, it still feels like we're just getting started. Before I turn it over to Isabelle, I'd like to note that on June 1, we closed the acquisition of North Star, our exclusive reseller of Braze technology in Australia and New Zealand.

We are thrilled to have brought their team fully in house and look forward to expanding in the Australia and New Zealand markets in the coming months and years. We look forward to updating you on our progress in that dynamic market. Despite macro challenges, we are confident in our ability to execute on our growth plan, while remaining disciplined and on a path to profitability. Further, we believe the investments in our products including generative AI in addition to the strong secular customer engagement wins at our backs positions Braze to become the industry standard for customer engagement in the coming years. And now, I will turn the call over to Isabelle.

Isabelle Winkles: Thank you, Bill, and thank you, everyone, for joining us today. As Bill mentioned, we reported a strong first quarter with revenue up 31% year-over-year to $101.8 million. This was driven by a combination of existing customer contract expansion, renewals and new business. Our subscription revenue remains the primary component of our total top-line, contributing 95% of our first quarter revenue. The remaining 5% represents a combination of one-time configuration and onboarding fees as well as other recurring professional services. Total customer count increased 24% year-over-year to 1,866 customers as of April 30, up 363 from the same period last year and up 96 from the prior quarter. Our total number of large customers, which we define as those spending at least $500,000 annually, grew 27% year-over-year to 164 and as of April 30, contributed 57% to our total ARR compared to a 54% contribution as of the same quarter last year.

Compared to last quarter, this reflects a 5% increase from 156 large customers that contributed 57% of our total ARR as of January 31. Measured across all customers, dollar-based net retention was 122%, while dollar-based net retention for large customers was 124%. Expansion was broadly distributed across industries and geographic regions. Revenue outside the U.S. contributed 43% of our total revenue in the first quarter, in line with the prior quarter. In the first quarter, our total remaining performance obligation was $478 million, up 22% year-over-year and up 5% sequentially. Current RPO was $325 million, up 28% year-over-year and up 4% sequentially. The year-over-year increases were driven by contract renewals and upsells and the signing of new customer contracts.

Overall dollar-weighted contract length remains at approximately two years. Non-GAAP gross profit in the quarter was $70 million, representing a non-GAAP gross margin of 68.8%. This compares to a non-GAAP gross profit of $52.5 million and non-GAAP gross margin of 67.8% in the first quarter of last year. The 100 basis point year-over-year margin improvement was driven by ongoing efficiencies related to personnel costs and continued economies of scale in our core technology expenses. Non-GAAP sales and marketing expense was $49.3 million or 48% of revenue compared to $40.2 million or 52% of revenue in the prior year quarter. While the dollar increase reflects our year-over-year investments in headcount costs to support our ongoing growth and global expansion, the improved efficiency reflects our disciplined investment approach to resource deployment across our go-to-market organization.

Non-GAAP R&D expense was $19.6 million or 19% of revenue compared to $15.3 million or 20% of revenue in the prior year quarter. The dollar increase was primarily driven by increased headcount costs to support the expansion of our existing offerings as well as to develop new products and features to drive growth. Non-GAAP G&A expense was $17.1 million or 17% of revenue compared to $15 million or 19% of revenue in the prior year quarter. The dollar increase was driven by investments to support our overall company growth, including headcount costs and increases in software subscription and licenses. Non-GAAP operating loss was $16 million compared to a non-GAAP operating loss of $18 million in the prior year quarter. Non-GAAP net loss attributable to Braze shareholders in the quarter was $12.6 million or a loss of $0.13 per share compared to a loss of $17.7 million or a loss of $0.19 per share in the prior year quarter.

Now turning to the balance sheet and cash flow statement. We ended the quarter with $507.4 million in cash, cash equivalents, restricted cash and marketable securities. Cash provided by operations during the quarter was $22.5 million compared to $17.9 million in the prior year quarter, driven by improved operating efficiencies, including improved spend management. While we reiterate that we expect our cash flow to fluctuate from quarter to quarter given the timing of customer and vendor payments, we note that this was the first period in which we delivered two consecutive quarters of positive operating cash flow, reflecting continued improvements in operating efficiency. Taking into consideration, the cash impact of capitalized costs, we generated $21.7 million of positive free cash flow compared to $15.7 million generated in the year ago quarter.

Before I turn to the forecast, I'd like to make a few brief comments regarding Braze's application of AI and ML capabilities to internal productivity and efficiency. Beyond product use cases, Braze is rapidly experimenting with AI and ML capabilities throughout the organization via projects designed to shorten ramp times, improved productivity and streamline processes. Projects are in flight using both custom large language models and GPT4 via OpenAI's APIs to serve as co-pilots to our sales, solution consulting and post-sales teams, including an exciting project focused on customer support, which we believe will increase productivity and decrease enablement needs by improving discovery and automating research across our comprehensive public facing documentation and internal knowledge base.

Across G&A functions, we believe there is a significant opportunity to use intelligent automation with machine learning in areas such as forecasting, human resources, accounting operations and internal audit. We will continue to implement and explore automation and AI/ML capabilities to complement decision-making and drive operational efficiencies. And now turning to our forecast. We are off to a strong start in fiscal 2024 and interest in high quality customer engagement solutions remained strong. However, the broader macroeconomic environment remains challenging and as such, our guidance continues to assume the current macro environment persist through fiscal 2024. We intend to maintain cost discipline and reiterate comments made during our Q4 earnings call that we believe we are well positioned to achieve a non-GAAP operating margin of better than negative 7% in Q4 of this year.

For the second quarter, we expect revenue to be in the range of $108 million to $109 million, which represents a year-over-year growth rate of approximately 26% at the midpoint. This includes a $1 million contribution from our acquisition of North Star which closed on June 1. For the second quarter, non-GAAP operating loss is expected to be in the range of $15 million to $16 million. Second quarter non-GAAP net loss is expected to be $13 million to $14 million. And second quarter non-GAAP net loss per share in the range of $0.13 to $0.14 per share, based on approximately 97.4 million weighted average basic shares outstanding during the period. For the full fiscal year 2024, we expect total revenue to be in the range of $442.5 million to $446.5 million, which represents a year-over-year growth rate of approximately 25% at the midpoint.

As a reminder, we expect our North Star acquisition to add less than 2% to fiscal year '24 revenue and our updated full-year guidance includes a $4 million contribution from North Star. Fiscal year 2024 non-GAAP operating loss is expected to be in the range of $54 million to $58 million. Non-GAAP net loss for the same period is expected to be in the range of $50 million to $54 million. Fiscal year 2024 non-GAAP net loss per share is expected to be $0.51 to $0.55 per share based on a full year weighted average basic share count of approximately 97.8 million shares. Our commitment to growing the top line while improving operating income and free cash flow margins remains unchanged. We reiterate that we expect Braze will achieve positive quarterly non-GAAP operating income and positive quarterly free cash flow by the end of fiscal year ended January 31, 2025.

We are very excited about Braze's future. We're focused on growing our business and delivering best-in-class customer engagement at scale while effectively managing costs to achieve our long-term financial targets. And with that, we'll now open the call for questions. Operator, please begin the Q&A.

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