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01/11 03:46
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Braze's earnings call reflects strong financial performance, with a 20% YoY revenue increase and improved operating margins. The acquisition of OfferFit and enhancements in e-commerce features are positive strategic moves. Despite some management ambiguity, analysts' sentiment remains optimistic. The strong customer growth, particularly among large customers, and positive cash flow are significant positives. The guidance for FY26 indicates continued growth, albeit at a slightly reduced rate. Considering the market cap and overall positive sentiment, a 2% to 8% stock price increase is likely over the next two weeks.
Revenue $162.1 million, up nearly 20% year-over-year, driven by existing customer contract expansions, renewals, and new business.
Non-GAAP Operating Margin Increased by over 900 basis points year-over-year, reflecting efficiency improvements.
Non-GAAP Net Income $7 million, compared to a loss of $6 million in the prior year quarter.
Free Cash Flow $23 million, compared to $11 million in the prior year quarter, includes $6 million in vendor payments related to the OfferFit acquisition.
Total Customer Count 2,342 customers, up 240 year-over-year and up 46 sequentially.
Large Customers (ARR over $500,000) 262 customers, up 24% year-over-year, contributing 62% to total ARR.
Dollar-Based Net Retention 109% overall, 112% for large customers.
Remaining Performance Obligation (RPO) $829.3 million, up 26% year-over-year, driven by contract renewals and upsells.
Current RPO $522 million, up 24% year-over-year.
Non-GAAP Gross Profit $112 million, with a non-GAAP gross margin of 69.3%, up from 67.9% year-over-year due to cost optimization.
Non-GAAP Sales and Marketing Expenses $64 million, or 39% of revenue, down from 44% of revenue in the prior year quarter.
Non-GAAP R&D Expense $25 million, or 15% of revenue, up from 17% of revenue in the prior year quarter.
Non-GAAP G&A Expense $21 million, or 13% of revenue, up from 14% of revenue in the prior year quarter.
Cash Provided by Operations $24 million, compared to $19 million in the prior year quarter.
New Product Launches: Braze announced the general availability of RCS messaging, in-product banners, and canvas context, enhancing their channel offerings and orchestration environment.
Acquisition of OfferFit: Braze successfully closed the acquisition of OfferFit, a leading AI decisioning company, to enhance customer engagement through reinforcement learning and personalized marketing.
Integration of OfferFit: Braze plans to integrate OfferFit's multi-agent decisioning engine into its platform to improve customer engagement and optimize marketing strategies.
Customer Growth: Braze's customer count rose to 2,342, with a significant increase in large customers spending over $500,000 annually, indicating strong market demand.
Revenue Growth: Braze reported a revenue of $162.1 million for Q1 2026, up nearly 20% year-over-year, with expectations of continued growth driven by the OfferFit acquisition.
International Revenue Contribution: Revenue outside the U.S. contributed 46% of total revenue, reflecting Braze's expanding global market presence.
Operational Efficiency: Braze increased its non-GAAP operating margin by over 900 basis points year-over-year, achieving a non-GAAP net income of over $7 million.
Cost Optimization: Non-GAAP gross margin improved to 69.3%, driven by cost optimization and personnel efficiencies.
Market Positioning: Braze aims to become the leading customer engagement platform globally, focusing on AI-driven solutions and replacing legacy marketing clouds.
Leadership Changes: Ed McDonnell will join as the new Chief Revenue Officer, bringing extensive experience in scaling revenue in the marketing technology sector.
Competitive Pressures: Braze faces competition from legacy marketing clouds that are failing to innovate or adapt to the evolving customer engagement landscape. This presents both a challenge and an opportunity for Braze to capture market share as brands seek improved customer engagement strategies.
Regulatory Issues: The call did not specifically mention any regulatory issues affecting Braze's operations or market.
Supply Chain Challenges: Global trade concerns have not yet materially affected deal cycles, indicating a potential risk if these concerns escalate.
Economic Factors: The economic and geopolitical environment remains dynamic, which could impact Braze's business activities and growth.
Integration Risks: The integration of OfferFit into Braze's platform presents risks related to execution and realizing the anticipated benefits from the acquisition.
Vendor Payments: Free cash flow is expected to fluctuate due to the timing of customer and vendor payments, which could impact financial stability.
Acquisition of OfferFit: Braze successfully closed the acquisition of OfferFit, a leading AI decisioning company, to enhance customer engagement through reinforcement learning.
Customer Growth: Braze's customer count rose to 2,342, with large customers (spending over $500,000 annually) increasing by 24% year-over-year.
Product Development: Braze is focused on integrating OfferFit's multi-agent decisioning engine into its platform to enhance AI-driven customer engagement.
Investment in AI: Braze is investing in AI technologies to improve customer engagement strategies and optimize marketing efforts.
Project Catalyst: Braze's Project Catalyst, a native AI agent, aims to personalize and optimize customer experiences.
Q2 2026 Revenue Guidance: Expected revenue for Q2 2026 is between $171 million and $172 million, representing approximately 18% year-over-year growth.
FY 2026 Revenue Guidance: Total revenue for FY 2026 is expected to be between $702 million and $706 million, with OfferFit contributing approximately $11 million to $12 million.
Q2 2026 Non-GAAP Operating Income: Expected to be between $0.5 million and $1.5 million, implying a margin of approximately 1%.
FY 2026 Non-GAAP Operating Income: Expected to be between $5.5 million and $9.5 million, with a margin improvement of roughly 100 basis points.
FY 2026 Non-GAAP Net Income: Expected to be between $17 million and $21 million, with net income per share projected at $0.15 to $0.18.
Free Cash Flow Q1 FY26: $23 million
Free Cash Flow Q1 FY25: $11 million
Cash at End of Q1 FY26: $540 million
Expected Revenue Q2 FY26: $171 million to $172 million
Expected Revenue FY26: $702 million to $706 million
Expected Non-GAAP Net Income FY26: $17 million to $21 million
Expected Non-GAAP Net Income per Share FY26: $0.15 to $0.18 per share
Braze's earnings call reflects strong financial performance with a 21% revenue growth forecast and improved operating margins. The Q&A session highlighted positive trends in customer engagement and AI integration. Despite economic headwinds, there is a normalization in buying patterns, and customers are investing in premium channels. The strategic expansion of AI capabilities and strong upsell momentum in high-value customer segments further support a positive outlook. The market cap suggests a moderate reaction, leading to a predicted stock price increase of 2% to 8% over the next two weeks.
The earnings call highlights strong customer growth, positive feedback on OfferFit integration, and improved financial metrics. Despite some hesitance in providing specific guidance on DBNRR, the overall sentiment is positive, driven by high competitive win rates, stable retention rates, and promising AI product adoption. The financial guidance and shareholder return plans are optimistic, with expected revenue growth and margin improvements. Given Braze's market cap, these factors suggest a positive stock price movement in the short term, likely in the 2% to 8% range.
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