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01/11 03:44
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $180 million, up 24% year-over-year and 11% from the prior quarter. Growth driven by existing customer contract expansions, renewals, and new business.
Committed Annual Recurring Revenue (ARR) $700 million, demonstrating strong demand for Braze's customer engagement platform.
Non-GAAP Operating Income $6 million, compared to $4 million in the prior year quarter, reflecting improved efficiency.
Non-GAAP Net Income $17 million, compared to $9 million in the prior year quarter. Includes a one-time $8 million benefit from the OfferFit acquisition.
Free Cash Flow $4 million, compared to $7 million in the prior year quarter. Includes a $6.9 million cash impact from the OfferFit acquisition.
Customer Count 2,422 customers, up 259 year-over-year and 80 sequentially. Includes 17 net new OfferFit customers.
Large Customers ($500,000+ ARR) 282 customers, up 27% year-over-year. Contributed 62% to total ARR.
Dollar-Based Net Retention (DBNR) 108% across all customers, 111% for large customers. Stabilized over the last 7 months.
Non-GAAP Gross Margin 69.3%, compared to 70.9% in the prior year quarter. Decrease due to higher premium messaging volumes.
Non-GAAP Sales and Marketing Expenses $70 million, 39% of revenue, compared to $58 million, 40% of revenue in the prior year quarter. Reflects investments in headcount and global expansion.
Non-GAAP R&D Expense $27 million, 15% of revenue, compared to $21 million, 15% of revenue in the prior year quarter. Increase driven by headcount costs for product development.
Non-GAAP G&A Expense $22 million, 12% of revenue, compared to $19 million, 13% of revenue in the prior year quarter. Increase due to investments in company growth and global expansion.
Total Remaining Performance Obligation (RPO) $862 million, up 25% year-over-year and 4% sequentially. Includes $12 million contribution from OfferFit.
Current RPO $558 million, up 27% year-over-year and 7% sequentially. Includes $10.5 million contribution from OfferFit.
AI-driven innovation: Braze is rapidly deploying new AI solutions, including reinforcement learning and generative AI, to enhance customer engagement and marketer productivity.
OfferFit by Braze: The acquisition of OfferFit has been integrated, accelerating AI decisioning capabilities for one-on-one personalization and expanding Braze's AI roadmap.
Composable intelligence: Braze is developing AI-driven tools to enable one-on-one personalization at scale, transforming customer engagement teams into strategic operators.
Customer growth: Braze increased its customer count by 80 sequentially and 259 year-over-year, reaching 2,422 customers.
Large customer expansion: Customers spending $500,000+ annually grew 27% year-over-year to 282, contributing 62% to total ARR.
Geographic expansion: Revenue outside the U.S. contributed 45% of total revenue, showing strong international presence.
Revenue growth: Braze achieved $180 million in revenue for Q2 2026, up 24% year-over-year.
Profitability: Non-GAAP operating income was $6 million, marking three consecutive quarters of positive operating income and free cash flow.
Efficiency improvements: Cost optimization in the technology stack and personnel efficiencies contributed to operational improvements.
AI and machine learning focus: Braze is leveraging AI and machine learning to enhance customer engagement and maintain competitive advantage.
Vendor consolidation: Braze is benefiting from trends in vendor consolidation, replacing legacy marketing clouds and point solutions.
Partnerships and ecosystem: Braze is collaborating with global strategic partners and investing in community education to strengthen its ecosystem.
Economic Uncertainty: Global trade and economic concerns have not yet materially affected deal cycles, but they remain a potential risk to future business momentum.
Competitive Pressures: Braze faces competition from legacy marketing clouds and less sophisticated point solutions, which could impact its ability to maintain or grow market share.
Integration Challenges: The integration of OfferFit by Braze, while off to a strong start, poses risks related to melding cultures, collaboration, and customer education on the new AI decisioning capabilities.
Profitability and Cost Management: While Braze has achieved positive non-GAAP operating income and free cash flow, maintaining profitability while reinvesting in the business could be challenging.
Customer Retention and Expansion: Dollar-based net retention has stabilized but remains a critical metric to monitor, as it reflects customer satisfaction and expansion potential.
Technological Advancements: Rapid advancements in AI and machine learning require continuous innovation to stay competitive, which could strain R&D resources and execution.
Geopolitical and Regional Risks: Revenue outside the U.S. contributes 45% of total revenue, exposing the company to geopolitical and regional economic risks.
Event and Marketing Costs: The upcoming Forge customer conference and other global events could increase operating expenses, impacting short-term profitability.
Revenue Guidance for Q3 FY2026: Revenue is expected to be in the range of $183.5 million to $184.5 million, representing a year-over-year growth rate of approximately 21% at the midpoint.
Revenue Guidance for FY2026: Total revenue is expected to be in the range of $717 million to $720 million, representing a year-over-year growth rate of approximately 21% at the midpoint.
Non-GAAP Operating Income for Q3 FY2026: Expected to be in the range of $3.5 million to $4.5 million, implying a non-GAAP operating margin of approximately 2% at the midpoint.
Non-GAAP Operating Income for FY2026: Expected to be in the range of $24.5 million to $25.5 million, implying a non-GAAP operating margin of 3.5%, a roughly 350 basis point improvement versus FY2025.
Non-GAAP Net Income for Q3 FY2026: Expected to be in the range of $6.5 million to $7.5 million, with non-GAAP net income per share in the range of $0.06 to $0.07 per share.
Non-GAAP Net Income for FY2026: Expected to be in the range of $45.5 million to $46.5 million, with net income per share expected to be $0.41 to $0.42 per share.
OfferFit Contribution to FY2026 Growth: OfferFit is expected to contribute approximately 2 percentage points to year-over-year growth for the full fiscal year.
AI and Product Development Outlook: Braze plans to expand and accelerate its AI roadmap, integrating OfferFit's AI decisioning engine to enhance customer engagement and personalization. Upcoming product innovations will be shared at the Forge conference.
Customer Engagement and Market Trends: Braze anticipates continued growth in customer engagement driven by AI advancements, vendor consolidation, and enterprise replacement cycles. The company expects to leverage these trends to expand market share.
The selected topic was not discussed during the call.
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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