Part I [Business](index=5&type=section&id=Item%201.%20Business) Braze, Inc. provides a comprehensive customer engagement platform that enables brands to manage customer interactions across various channels in real-time - Braze is a customer engagement platform that powered interactions with **3.7 billion monthly active users** as of January 2022, an increase from **3.0 billion** in January 2021[26](index=26&type=chunk) - The company serves over **1,300 customers** globally and processed over **nine trillion consumer-generated data points** in fiscal year 2022[26](index=26&type=chunk) - Braze's platform supports cross-channel interactions including in-app messages, push notifications, email, SMS, and integrations with ad networks like Facebook and Google[32](index=32&type=chunk) - The company's growth strategy focuses on acquiring new customers, expanding within its existing customer base, expanding geographically, investing in technology leadership, and strengthening partnerships[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [Overview](index=5&type=section&id=Item%201.%20Business%20-%20Overview) Braze provides a leading customer engagement platform designed to power personalized, real-time interactions between consumers and brands - Braze's mission is to forge human connections between consumers and the brands they love through relevant and memorable experiences[25](index=25&type=chunk) - The platform is built on a proprietary, enterprise-grade stream processing architecture that processes first-party customer data in real time, avoiding channel silos[29](index=29&type=chunk)[30](index=30&type=chunk) [Our Products](index=8&type=section&id=Item%201.%20Business%20-%20Our%20Products) Braze offers a vertically integrated platform covering data ingestion, classification, orchestration, personalization, and action - Data ingestion is managed via Braze SDKs for various platforms (iOS, Android, Web, etc.) and REST APIs for server-to-server integration[61](index=61&type=chunk)[62](index=62&type=chunk) - The Orchestration layer features 'Canvas', a flagship tool for creating multi-step, cross-channel messaging journeys, and 'Campaigns' for single-channel or multi-channel messages[67](index=67&type=chunk)[68](index=68&type=chunk) - The Action layer includes a wide range of messaging channels: In-Product (In-App/In-Browser Messages, Content Cards) and Out-of-Product (Push, Email, SMS/MMS, Ad Network Sync)[79](index=79&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - Braze Currents allows for real-time data export to partners like Snowflake, Segment, and Amplitude, enhancing the customer's technology ecosystem[88](index=88&type=chunk)[89](index=89&type=chunk) [Competition](index=12&type=section&id=Item%201.%20Business%20-%20Competition) The customer engagement market is highly competitive, with Braze facing competition from legacy marketing clouds and point solutions - Key competitors include legacy marketing clouds (Adobe, Salesforce) and point solutions (Airship, Iterable, Leanplum, MailChimp, MoEngage)[93](index=93&type=chunk) - Competitors may have substantial advantages such as greater name recognition, longer operating histories, and significantly more financial and technical resources[94](index=94&type=chunk) - Larger competitors may bundle products or restrict access to their platforms, making it difficult for customers to integrate Braze's platform[96](index=96&type=chunk) [Human Capital](index=14&type=section&id=Item%201.%20Business%20-%20Human%20Capital) Braze considers its employees its most valuable resource, emphasizing culture, diversity, and social responsibility - As of January 31, 2022, Braze had **1,164 full-time employees**[124](index=124&type=chunk) - The company's workforce as of January 31, 2022, was **54% male** and **44% female**, with the remainder being non-binary or declining to self-identify[118](index=118&type=chunk) - Braze has joined the Pledge 1% movement, reserving up to **964,647 shares** of Class A common stock for social impact and ESG initiatives[122](index=122&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks that could materially affect its business, including operating losses, intense competition, and regulatory compliance - The company has a history of operating losses and may not achieve or sustain profitability in the future[140](index=140&type=chunk) - Braze faces intense competition from legacy marketing clouds like Adobe and Salesforce and point solutions, which may have greater resources[147](index=147&type=chunk) - The business relies on third-party providers, particularly Amazon Web Services (AWS), for cloud infrastructure, and any disruption could adversely affect operations[216](index=216&type=chunk) - Three material weaknesses in internal control over financial reporting have been identified, related to the financial close process, revenue recognition controls, and IT controls[303](index=303&type=chunk) - The dual-class stock structure concentrates approximately **97.6% of voting power** with holders of Class B common stock as of January 31, 2022, limiting the influence of Class A stockholders[314](index=314&type=chunk) [Unresolved Staff Comments](index=45&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[343](index=343&type=chunk) [Properties](index=45&type=section&id=Item%202.%20Properties) Braze's corporate headquarters is located in New York City, with additional leased office spaces globally, and it owns no real property - The company's headquarters is in New York City, with a lease for approximately **84,000 square feet** expiring in April 2024[344](index=344&type=chunk) - Braze leases additional office space in San Francisco, Austin, Chicago, Berlin, London, and Singapore and does not own any real property[344](index=344&type=chunk) [Legal Proceedings](index=45&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any litigation expected to have a material adverse effect on its business or financial condition - As of the filing date, the company is not a party to any litigation expected to have a material adverse effect on its business[345](index=345&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[347](index=347&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=47&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Braze's Class A common stock trades on Nasdaq, the company has never paid dividends, and its November 2021 IPO generated significant net proceeds - Class A common stock is traded on Nasdaq under the symbol "**BRZE**". Class B common stock is not listed[350](index=350&type=chunk) - The company has never declared or paid dividends and does not intend to in the foreseeable future[353](index=353&type=chunk) - The November 2021 IPO of **7.5 million Class A shares** at **$65.00 per share** generated net proceeds of **$456.8 million** for the company[356](index=356&type=chunk)[359](index=359&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Braze's revenue grew significantly in fiscal 2022, driven by customer acquisition and expansion, though net losses increased due to investments, while liquidity remains strong from IPO proceeds Key Financial Performance (FY2022 vs FY2021) | Metric | Fiscal Year 2022 | Fiscal Year 2021 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | $238.0 million | $150.2 million | +58% | | **Net Loss** | ($78.2 million) | ($32.0 million) | +144% | | **Net Cash Used in Operating Activities** | ($35.4 million) | ($6.1 million) | +480% | - The number of customers grew from **890** as of January 31, 2021, to **1,375** as of January 31, 2022[369](index=369&type=chunk)[406](index=406&type=chunk) - The dollar-based net retention rate for the trailing 12 months ended January 31, 2022, was **128%** for all customers and **136%** for customers with ARR of **$500,000** or more[377](index=377&type=chunk) - International revenue accounted for approximately **40% of total revenue** in fiscal 2022, consistent with the prior year[378](index=378&type=chunk) [Results of Operations (FY2022 vs. FY2021)](index=53&type=section&id=Item%207.%20MD%26A%20-%20Results%20of%20Operations) For fiscal year 2022, revenue increased by 58.5% to $238.0 million, but operating expenses rose significantly, leading to a larger loss from operations Revenue Comparison (FY2022 vs. FY2021) | Revenue Type | FY 2022 ($M) | FY 2021 ($M) | Change ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$238.0** | **$150.2** | **$87.8** | **58.5%** | Operating Expense Comparison (FY2022 vs. FY2021) | Expense Category | FY 2022 ($M) | FY 2021 ($M) | Change ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | Sales and Marketing | $127.1 | $70.7 | $56.5 | 79.9% | | Research and Development | $59.0 | $29.2 | $29.8 | 102.1% | | General and Administrative | $51.6 | $28.0 | $23.6 | 84.4% | | **Total Operating Expenses** | **$237.7** | **$127.8** | **$109.9** | **86.0%** | - The increase in revenue was driven by growth from existing customers (**62%**) and new customers (**38%**)[406](index=406&type=chunk) - Gross margin increased from **63.7%** to **67.0%** due to economies of scale and cost optimization initiatives[409](index=409&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Item%207.%20MD%26A%20-%20Liquidity%20and%20Capital%20Resources) As of January 31, 2022, Braze's liquidity was $518.1 million, significantly boosted by IPO proceeds, and is deemed sufficient for the next 12 months - Principal liquidity as of Jan 31, 2022, was **$518.1 million** in cash, cash equivalents, and marketable securities[416](index=416&type=chunk) - The company received net proceeds of **$456.8 million** from its IPO in November 2021[417](index=417&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(35,398) | $(6,080) | $(7,365) | | Net cash provided by/(used in) investing activities | $18,040 | $22,472 | $(87,234) | | Net cash provided by financing activities | $467,910 | $4,866 | $1,257 | Non-GAAP Free Cash Flow Reconciliation (in thousands) | Metric | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(35,398) | $(6,080) | $(7,365) | | Less: Purchases of property and equipment | $(2,310) | $(2,466) | $(1,724) | | Less: Capitalized internal-use software costs | $(2,065) | $(1,886) | $(830) | | **Non-GAAP Free cash flow** | **$(39,773)** | **$(10,432)** | **$(9,919)** | [Critical Accounting Policies and Estimates](index=58&type=section&id=Item%207.%20MD%26A%20-%20Critical%20Accounting%20Policies%20and%20Estimates) Braze's critical accounting policies involve significant judgment in revenue recognition, capitalization of contract costs, and stock-based compensation valuation - Revenue recognition (ASC 606) requires judgment in identifying performance obligations and determining standalone selling prices (SSP) to allocate transaction prices[441](index=441&type=chunk)[443](index=443&type=chunk) - Incremental costs to obtain contracts, mainly sales commissions, are capitalized and amortized over an estimated benefit period of up to **four years**[444](index=444&type=chunk) - Stock-based compensation is valued using the Black-Scholes model, which requires subjective inputs for expected volatility, term, and, prior to the IPO, the fair value of common stock[447](index=447&type=chunk) - The company maintains a full valuation allowance on its net deferred tax assets, concluding it is not more likely than not that they will be realized[461](index=461&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks primarily from interest rate fluctuations on its cash holdings and foreign currency exchange rates on operating expenses - The company's primary market risk exposures are interest rate risk and foreign currency exchange rate risk[464](index=464&type=chunk) - As of January 31, 2022, the company had **$518.1 million** in cash, cash equivalents, and marketable securities subject to interest rate changes[467](index=467&type=chunk) - Foreign currency risk arises from operating expenses denominated in local currencies (primarily in the UK, Singapore, and Japan), as most sales are in U.S. dollars[469](index=469&type=chunk) [Financial Statements and Supplementary Data](index=62&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for Braze, Inc. for the fiscal years ended January 31, 2022, 2021, and 2020 Consolidated Balance Sheet Highlights (as of Jan 31, 2022) | Account | Amount (in thousands) | | :--- | :--- | | **Total Assets** | **$666,262** | | Total Current Assets | $608,185 | | Cash and cash equivalents | $478,937 | | **Total Liabilities** | **$161,444** | | Deferred revenue | $126,260 | | **Total Stockholders' Equity** | **$501,583** | Consolidated Statement of Operations Highlights (FY ended Jan 31, 2022) | Account | Amount (in thousands) | | :--- | :--- | | **Revenue** | **$238,035** | | Gross Profit | $159,524 | | Loss from operations | $(78,211) | | **Net Loss** | **$(78,167)** | | Net loss per share, basic and diluted | $(2.20) | [Controls and Procedures](index=98&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management evaluated the company's disclosure controls and procedures and concluded they were not effective as of January 31, 2022 - Management concluded that disclosure controls and procedures were not effective as of January 31, 2022[676](index=676&type=chunk) - The ineffectiveness is due to three unremediated material weaknesses in internal control over financial reporting[679](index=679&type=chunk) - The material weaknesses are related to the financial close process, revenue recognition controls, and IT general controls[679](index=679&type=chunk) - A remediation plan is in place, but the controls have not been operational long enough to be considered fully remediated[680](index=680&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=100&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2022 Annual Meeting Proxy Statement - Required information is incorporated by reference from the forthcoming 2022 Proxy Statement[688](index=688&type=chunk) - The company has adopted a Code of Conduct, the full text of which is available on its website[689](index=689&type=chunk) [Executive Compensation](index=100&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement - Required information on executive compensation is incorporated by reference from the 2022 Proxy Statement[690](index=690&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=100&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners, management, and related stockholder matters, including securities authorized for issuance under equity compensation plans, is incorporated by reference from the company's 2022 Proxy Statement - Required information on security ownership and equity compensation plans is incorporated by reference from the 2022 Proxy Statement[691](index=691&type=chunk)[692](index=692&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=100&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2022 Proxy Statement - Required information on related transactions and director independence is incorporated by reference from the 2022 Proxy Statement[693](index=693&type=chunk) [Principal Accounting Fees and Services](index=100&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's 2022 Proxy Statement - Required information on principal accounting fees and services is incorporated by reference from the 2022 Proxy Statement[694](index=694&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=101&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Annual Report on Form 10-K - This item lists the consolidated financial statements and an index of exhibits filed with the report[697](index=697&type=chunk)[699](index=699&type=chunk) - Financial statement schedules have been omitted because the required information is either inapplicable or already included in the financial statements and notes[698](index=698&type=chunk) [Form 10-K Summary](index=102&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that there is no Form 10-K summary provided - None[704](index=704&type=chunk)

Investor Presentation January 2022 Disclaimer 2 Forward-Looking Statements This presentation contains, and statements made during this presentation contain, "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding Braze's anticipated business growth and market opportunity. These forward-looking statements are based on current expectations, estimates, forecasts and projections. W ...

Braze, Inc. (NASDAQ:BRZE) Q3 2022 Earnings Conference Call December 20, 2021 5:00 PM ET Company Participants Chris Ferris - Head of Investor Relations Bill Magnuson - Co-Founder & Chief Executive Officer Isabelle Winkles - Chief Financial Officer Conference Call Participants Gabriela Borges - Goldman Sachs Mark Murphy - JPMorgan Raimo Lenschow - Barclays Arjun Bhatia - William Blair Brent Bracelin - Piper Sandler DJ Hynes - Canaccord Derrick Wood - Cowen & Company Brian Peterson - Raymond James Scott Berg - ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________ FORM 10-Q ______________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commissio ...