Braze, Inc. (BRZE) Q4 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, optimistic AI-driven product development, and strategic market positioning. The Q&A session reinforced positive sentiment with no changes in guidance philosophy and improved DBNR. Despite mixed margin impacts, the focus on achieving an 8% operating margin and strong early adoption of new products suggest positive market reception. The company's emphasis on AI integration and verticalization further supports growth potential. Given the market cap, the stock price is likely to react positively, within the 2% to 8% range, over the next two weeks.
Key Financial Performance
Revenue (Q4 FY2026) $205 million, up 28% year-over-year and 8% from the prior quarter. Organic revenue growth accelerated year-over-year for the third straight quarter. Growth driven by existing customer contract expansions, renewals, and new business.
Trailing 12-month dollar-based net retention 109%, showing strength and positive inflection during the quarter.
Remaining Performance Obligations (RPO) Surpassed $1 billion, up 30% year-over-year and 16% sequentially. Growth driven by strong Q4 bookings, healthy renewals, a large quarter for available renewal dollars, and a small increase in contract duration.
Annual Recurring Revenue (ARR) Surpassed $800 million early in fiscal 2027, demonstrating strong demand for the platform.
Revenue (Full FY2026) $28 million of non-GAAP operating income with operating margins expanding nearly 400 basis points year-over-year. Revenue growth of 24% year-over-year.
Non-GAAP Net Income (FY2026) $42 million, up from $18 million last year. Growth attributed to profitability framework and investments in BrazeAI and the transformation of OfferFit into Braze Decisioning Studio.
Free Cash Flow (FY2026) $58 million, providing financial flexibility for investments.
Customer Count (Q4 FY2026) 2,609 customers, up 14% year-over-year and 81 sequentially. Large customers spending $500,000+ annually grew 35% year-over-year to 333.
Dollar-Based Net Retention (Large Customers) 110%, consistent with the prior quarter.
Non-GAAP Gross Margin (Q4 FY2026) 67.2%, down from 69.9% in the prior-year quarter. Decrease driven by higher premium messaging volumes and hosting costs, partially offset by improved efficiencies in personnel costs.
Non-GAAP Operating Income (Q4 FY2026) $15 million, 7% of revenue, compared to $8 million or 5% of revenue in the prior-year quarter.
Non-GAAP Net Income (Q4 FY2026) $11 million or $0.10 per share, compared to $12 million or $0.12 per share in the prior-year quarter. Impacted by a $5 million purchase accounting adjustment related to OfferFit acquisition.
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Operating Highlights
BrazeAI advancements: BrazeAI Decisioning Studio, formerly OfferFit, contributed $5.7 million in revenue in Q4. New products like Agent Console and BrazeAI Operator were launched ahead of schedule, showcasing rapid adoption and enhancing customer engagement capabilities.
AI-driven solutions: BrazeAI Operator and Agent Console are accelerating workflows and enhancing customer journeys. These tools leverage Braze's data platform and AI capabilities to deliver sophisticated customer engagement solutions.
Enterprise growth: Q4 bookings rose over 50% year-over-year, with strong demand in the enterprise sector. Large deals included 29 contracts exceeding $500,000, with 7 deals surpassing $1 million.
Global expansion: Revenue outside the U.S. contributed 45% of total revenue in Q4, indicating strong international presence.
Revenue growth: Q4 revenue reached $205 million, up 28% year-over-year. Annual recurring revenue surpassed $800 million early in fiscal 2027.
Operational efficiency: Non-GAAP operating income for FY 2026 was $28 million, with operating margins expanding nearly 400 basis points year-over-year. Free cash flow for FY 2026 was $58 million.
Share repurchase program: Braze initiated its first $100 million share repurchase program, reflecting confidence in long-term growth.
AI-driven disruption: Braze is leveraging AI to redefine customer engagement, positioning itself as a leader in the evolving marketing technology landscape.
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Risk or Challenges
Market Conditions: The company faces competitive pressures from legacy marketing clouds, as highlighted by the migration of brands from these platforms to Braze. This indicates a need to continuously innovate to maintain market share.
Economic Uncertainties: The company operates in a global market, with 45% of revenue coming from outside the U.S. This exposes Braze to risks related to currency fluctuations, geopolitical tensions, and varying economic conditions across regions.
Regulatory Hurdles: Operating in diverse geographies may subject Braze to different regulatory requirements, which could impact operations and compliance costs.
Supply Chain and Operational Costs: Higher premium messaging volumes and hosting costs have impacted gross margins, indicating potential challenges in managing operational expenses.
Strategic Execution Risks: The company is heavily investing in AI-driven solutions and new product developments. Failure to achieve expected outcomes from these investments could impact financial performance and strategic goals.
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Guidance & Outlook
Financial Outlook for Q1 FY 2027: Revenue expected to be in the range of $204.5 million to $205.5 million, representing a year-over-year growth rate of approximately 26% at the midpoint. Non-GAAP operating income projected to be $10 million to $11 million, with a non-GAAP operating margin of approximately 5%. Non-GAAP net income expected to be $11 million to $12 million, with non-GAAP net income per share in the range of $0.10 to $0.11 based on approximately 112 million weighted average diluted shares.
Financial Outlook for FY 2027: Total revenue projected to be in the range of $884 million to $889 million, representing a year-over-year growth rate of approximately 20% at the midpoint. Non-GAAP operating income expected to be in the range of $69 million to $73 million, implying a non-GAAP operating margin of 8%, a more than 400-basis-point improvement versus FY 2026. Non-GAAP net income projected to be $69 million to $73 million, with net income per share expected to be $0.61 to $0.65 based on a full-year weighted average diluted share count of approximately 113 million shares.
AI-Driven Solutions and Product Advancements: Braze plans to continue investing in AI-driven customer engagement solutions, including the BrazeAI Decisioning Studio, Agent Console, and Operator. These advancements aim to enhance customer engagement, automate workflows, and drive data insights. The company is focused on scaling agentic use cases across marketing programs, customer conversations, product experiences, and data workloads.
Market Trends and Customer Behavior: Braze anticipates strong market demand for AI-driven solutions, particularly in the enterprise segment. The company expects continued vendor consolidation and replacement trends, with brands migrating from legacy platforms to Braze's AI-driven omnichannel approach. Pipeline generation and sales productivity are expected to remain robust.
Share Repurchase Program: Braze has initiated a $100 million share repurchase program, including a $50 million accelerated share repurchase transaction to be completed by the end of Q1 FY 2027. This reflects confidence in the company's fundamentals and disciplined capital allocation strategy.
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Shareholder Return Plan
Share Repurchase Program Initiation: Braze has initiated its first share repurchase program, reflecting confidence in its long-term growth opportunity. The Board has authorized a $100 million share repurchase program, which includes a $50 million accelerated share repurchase (ASR) transaction planned to be executed before the end of the first quarter of fiscal 2027. This program is seen as a meaningful way to drive shareholder value.
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Key Q&A
Q:How does Braze's CEO, William Magnuson, feel about the company's growth trajectory and the role of AI in supporting growth trends?
A:William Magnuson expressed optimism about Braze's growth trajectory, highlighting the differentiation of their AI roadmap and its impact on win rates and deal velocity. He emphasized the integration of BrazeAI, which enhances accessibility and capability, and the company's robust product roadmap, global sales organization, and innovative customer base.
Q:Is there any change in Braze's guidance philosophy for the full year revenue guide?
A:Isabelle Winkles, CFO, stated that there is no change in the guidance philosophy. She highlighted strong momentum across various dimensions, including 2-year contracts, larger in-quarter contract sizes, and excitement around AI capabilities. She also mentioned ongoing strength in the enterprise and the Americas.
Q:What challenges do customers face when attempting to replace Braze's platform with custom-coded solutions?
A:William Magnuson explained that replacing Braze's platform is challenging due to the need for tightly integrated, high-performance infrastructure, comprehensiveness in handling enterprise data, and the complexity of customer journeys. He emphasized Braze's advantages in privacy, security, regulatory compliance, and operational demands.
Q:How does Braze benefit from the adoption of the Universal Commerce Protocol (UCP) and new consumer interfaces?
A:William Magnuson stated that Braze invests in new consumer interfaces to understand customer journeys better and enhance personalization. He emphasized Braze's focus on direct-to-consumer relationships and managing first-party data to enrich customer relationships and drive long-term business success.
Q:What is the outlook for Braze's Dollar-Based Net Retention Rate (DBNR)?
A:Isabelle Winkles noted that the DBNR improved to 109% and is trending upward. She mentioned that the in-quarter organic DBNR is above the reported figure and expressed confidence that the company has moved past the troughing phase.
Q:What is the impact of premium messaging channels and new products on Braze's gross margins?
A:Isabelle Winkles explained that premium messaging channels have mixed in with lower margins, but new products like Agent Console have slightly better margins. She emphasized that the company is focused on achieving an 8% operating income margin for the year.
Q:How is Braze leveraging AI to enhance its existing capabilities and drive business results?
A:William Magnuson highlighted that BrazeAI makes the platform smarter and easier to use, driving faster adoption and higher confidence among users. He provided examples of AI-driven features like the Agent Console and Operator, which improve campaign performance and enable marketers to use Braze's capabilities more effectively.
Q:What are Braze's plans for verticalization and its impact on the business?
A:Isabelle Winkles stated that verticalization is an ongoing, methodical process to deepen focus on specific verticals. She indicated that it is part of the company's ordinary course of business and does not involve significant changes in spending.
Q:What is the adoption and revenue impact of Braze's Agent Console?
A:William Magnuson reported strong early adoption of the Agent Console, which consumes flexible credits under a consumption-based pricing model. He noted that while it supports early renewals and upsells, revenue recognition is ratable over the contract length.
Q:How does Braze ensure compatibility with third-party AI tools and maintain its competitive edge?
A:William Magnuson emphasized Braze's composable architecture, high-performance infrastructure, and flexible APIs, which enable integration with third-party AI tools. He highlighted Braze's focus on context engineering and performance to manage complexity and drive better outcomes.
Q:What proprietary data moats does Braze have, and how do they contribute to AI solutions?
A:William Magnuson explained that Braze's proprietary data moats include the Braze Data Platform and its context engineering capabilities. These enable comprehensive, rapid access to data and deliberate design for AI solutions like Decisioning Studio and Agent Console, enhancing performance and reliability.
Q:What is the progress and impact of the OfferFit acquisition on Braze's business?
A:Isabelle Winkles noted strong momentum in cross-selling OfferFit to the installed base. She mentioned ongoing efforts to improve margins through product tiers and self-service options, while also managing implementation and onboarding expenses.
Q:Review of Unclear Management Responses
A:Management did not avoid answering any questions directly. All responses were detailed and addressed the questions asked.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI architecture
AI disruption
AI era
AI field
AI inference
AI integration
AI set
AI workload
APAC bank
Agent Console
BrazeAI Agent
BrazeAI Decisioning
Decisioning Studio
Isabelle
Platform
agent customer
beta
confidence
customer community
dashboard
detail
disruption opportunity
enterprise customer
frontier
infrastructure
insight
marketing program
message
milestone
mission
power
profitability framework
prompt
repurchase program
share repurchase
tandem
task
workflow
BRZE Transcript
Braze, Inc. (BRZE) Q4 2026 Earnings Call Transcript
Positive3-24
The earnings call highlights strong financial performance, optimistic AI-driven product development, and strategic market positioning. The Q&A session reinforced positive sentiment with no changes in guidance philosophy and improved DBNR. Despite mixed margin impacts, the focus on achieving an 8% operating margin and strong early adoption of new products suggest positive market reception. The company's emphasis on AI integration and verticalization further supports growth potential. Given the market cap, the stock price is likely to react positively, within the 2% to 8% range, over the next two weeks.
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Neutral12-11
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Positive12-9
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.
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