Braze co-founder and CEO Bill Magnuson helps us understand customer engagement.Bill Magnuson is the chairman, CEO, and co-founder of Braze, a customer engagement platform that works with some of business's biggest names. In this podcast, Motley Fool analyst Tim Beyers caught up with Magnuson for a conversation about:Braze's origin story.The power of personalized marketing.The company's latest results, and its plans to create even more value in the future.To catch full episodes of all The Motley Fool's free ...

Key PointsShares of Braze have been under pressure since February, with last week’s report driving further selling. However, it’s starting to look like the stock is extremely oversold and could soon be due for a bounce. Simultaneously, several heavyweight analysts have reiterated their Buy ratings, so the argument for this being an entry opportunity is compelling. 5 stocks we like better than BrazeThe 17% drop from February’s peak, through the middle of last week might well have been a fair warning to inves ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) Braze operates a comprehensive customer engagement platform, serving 2,044 customers and 6.2 billion monthly active users as of January 2024, focusing on growth through customer acquisition, expansion, and AI innovation - Braze is a customer engagement platform that enables brands to manage direct, meaningful relationships with their customers through a **vertically integrated system** for data ingestion, orchestration, classification, and personalization[34](index=34&type=chunk)[208](index=208&type=chunk)[211](index=211&type=chunk) - The company's growth strategy centers on acquiring new customers, expanding within the existing base, geographical expansion, and strengthening technology leadership, particularly in AI[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Braze faces **intense competition** from established software companies, including legacy marketing clouds like Adobe and Salesforce, and point solutions such as Airship, Iterable, Klaviyo, and MoEngage[308](index=308&type=chunk) Key Operational Metrics (as of January 2024) | Metric | Value | | :--- | :--- | | Customers | 2,044 | | Monthly Active Users (MAUs) | 6.2 billion (up from 4.8 billion in Jan 2023) | [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks in sustaining growth and profitability, including intense competition, reliance on third-party infrastructure, data privacy regulations, and financial challenges from historical net losses and its dual-class stock structure - The company has a history of operating losses, with a **net loss of $130.4 million** for the fiscal year ended January 31, 2024, and an **accumulated deficit of $483.1 million**, making achieving and sustaining profitability a **key risk**[88](index=88&type=chunk)[364](index=364&type=chunk) - Business operations are **highly dependent** on third-party cloud infrastructure, particularly **Amazon Web Services (AWS)**, where any disruption, termination, or cost increase could **significantly harm** the business[15](index=15&type=chunk)[433](index=433&type=chunk) - The company faces **intense competition** from well-established companies like Adobe and Salesforce, which have **greater resources and brand recognition**, potentially leading to **pricing pressure and loss of market share**[341](index=341&type=chunk)[368](index=368&type=chunk) - The business is subject to **stringent and evolving data privacy laws** like GDPR and CCPA, where non-compliance could result in **significant fines, litigation, and reputational damage**[18](index=18&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk) - The **dual-class stock structure** concentrates approximately **78.8% of voting power** with holders of Class B common stock, **limiting the influence** of Class A stockholders on corporate matters[130](index=130&type=chunk)[180](index=180&type=chunk) [Unresolved Staff Comments](index=46&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - There are **no unresolved staff comments**[516](index=516&type=chunk) [Cybersecurity](index=46&type=section&id=Item%201C.%20Cybersecurity) Braze maintains an enterprise-wide cybersecurity program overseen by the CTO and audit committee, designed to protect against threats through various tools and audits, with no material incidents reported to date - The company has an **enterprise-wide cybersecurity program** that includes security tools, a bug bounty program, incident response plans, and employee training[92](index=92&type=chunk) - Cybersecurity risk management oversight is delegated to the **audit committee of the board**, which receives **regular reports** from the Chief Technology Officer[62](index=62&type=chunk) - As of the report date, the company has **not identified any cybersecurity incidents** that have **materially affected** or are reasonably likely to materially affect its business, operations, or financial condition[518](index=518&type=chunk) [Properties](index=47&type=section&id=Item%202.%20Properties) The company leases its New York City headquarters, with a new 92,300 square feet lease through January 2034, and maintains additional leased office spaces globally - The company's headquarters is in **New York City**, with a new lease for approximately **92,300 square feet** commencing in October 2023 and terminating in **January 2034**[94](index=94&type=chunk) - Braze leases **additional office space** in **key global cities** including Austin, Berlin, Chicago, Jakarta, London, Paris, San Francisco, Singapore, Sydney, and Tokyo[94](index=94&type=chunk) [Legal Proceedings](index=47&type=section&id=Item%203.%20Legal%20Proceedings) As of the report date, Braze is not a party to any litigation expected to have a material adverse effect on its business or financial condition - The company is **not currently a party** to any litigation expected to have a **material adverse effect** on its business[63](index=63&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[519](index=519&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=48&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 under "BRZE"; the company has never paid dividends and intends to retain earnings for business expansion - The company's **Class A common stock** is traded on **The Nasdaq Global Select Market** under the symbol "**BRZE**"[41](index=41&type=chunk) - Braze has **never paid dividends** and does not intend to in the foreseeable future, **retaining earnings for business expansion**[42](index=42&type=chunk) [Reserved](index=48&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - Item 6 is **reserved**[66](index=66&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) For FY2024, Braze reported $471.8 million revenue, up 33%, with a net loss of $130.4 million, improved gross margin, positive operating cash flow of $6.9 million, and strong retention rates Key Financial Performance (Fiscal Year Ended Jan 31) | Metric | 2024 | 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $471.8M | $355.4M | +33% | | Net Loss | ($130.4M) | ($140.7M) | -7.3% | | Gross Profit | $324.3M | $239.6M | +35.3% | | Gross Margin | 68.7% | 67.4% | +1.3 p.p. | | Cash from Operations | $6.9M | ($22.3M) | N/A | - Revenue growth of **$116.4 million** was primarily driven by a **$112.7 million** increase in subscription revenue, with approximately **66.8%** from existing customers and **33.2%** from new customers[116](index=116&type=chunk) - The dollar-based net retention rate for the trailing 12 months ended January 31, 2024, was **117%** for all customers and **120%** for customers with ARR of **$500,000** or more[72](index=72&type=chunk) - The number of customers with Annual Recurring Revenue (ARR) of **$500,000** or more grew to **202** as of January 31, 2024, up from **156** in the prior year[72](index=72&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate risk on its $480.0 million portfolio and foreign currency exchange rate risk from international operating expenses, with no hedging activities to date - The company is exposed to **interest rate risk** on its **$480.0 million** portfolio of cash, cash equivalents, and marketable securities, where a hypothetical **10%** change in interest rates is **not expected to have a material impact**[720](index=720&type=chunk)[766](index=766&type=chunk) - **Foreign currency exchange rate risk** exists as **operating expenses** are denominated in local currencies of foreign subsidiaries, and while most sales are in U.S. dollars, **fluctuations in exchange rates** can affect consolidated results[739](index=739&type=chunk) - Inflation has **not had a material effect** on the business, but the company notes that if costs become subject to inflationary pressures, it may **not be able to fully offset** them through price increases[719](index=719&type=chunk) [Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2022-2024, including notes on accounting policies, the North Star acquisition, and disclosures on revenue, deferred revenue, and net operating loss carryforwards - The report from the independent auditor, Ernst & Young LLP, provides an **unqualified opinion** on the consolidated financial statements and the **effectiveness of internal control over financial reporting**[743](index=743&type=chunk)[775](index=775&type=chunk) - On June 1, 2023, the company **acquired North Star Y, Pty Ltd**, its exclusive reseller in Australia and New Zealand, for a total consideration of **$27.0 million**, resulting in the recognition of **$28.4 million in goodwill**[621](index=621&type=chunk)[671](index=671&type=chunk)[1005](index=1005&type=chunk) - As of January 31, 2024, the company had federal and state **net operating loss (NOL) carryforwards** of approximately **$355.4 million** and **$248.4 million**, respectively, which may be available to offset future taxable income, subject to certain limitations[51](index=51&type=chunk) - Total stock-based compensation expense recognized for the fiscal year ended January 31, 2024 was **$99.3 million**, up from **$73.3 million** in the prior year[634](index=634&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=99&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - **None**[1029](index=1029&type=chunk) [Controls and Procedures](index=99&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of January 31, 2024, having remediated a prior material weakness in revenue recognition controls, with the Braze Australia acquisition excluded from internal control evaluation - Management concluded that disclosure controls and procedures were **effective** as of January 31, 2024[652](index=652&type=chunk) - A **material weakness** in internal control over financial reporting related to revenue recognition, identified in the prior fiscal year, has been **successfully remediated** as of January 31, 2024[679](index=679&type=chunk)[1033](index=1033&type=chunk) - The audit of internal controls **excluded** the acquisition of Braze Australia (formerly North Star), which represented approximately **1% of total assets** and **6% of total revenues**[653](index=653&type=chunk) [Other Information](index=100&type=section&id=Item%209B.%20Other%20Information) Several executive officers, including the CTO, President and CCO, and CFO, entered into Rule 10b5-1 trading plans for future stock sales during the fourth fiscal quarter - The **Chief Technology Officer**, **President and Chief Commercial Officer**, and **Chief Financial Officer** each entered into **Rule 10b5-1(c) trading plans** for the sale of Class A common stock[681](index=681&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=100&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - **Not applicable**[1015](index=1015&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=101&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 company's 2024 Proxy Statement - Information is **incorporated by reference** from the forthcoming **2024 Proxy Statement**[683](index=683&type=chunk) [Executive Compensation](index=101&type=section&id=Item%2011.%20Executive%20Compensation) Information detailing executive compensation is incorporated by reference from the company's 2024 Proxy Statement - Information is **incorporated by reference** from the forthcoming **2024 Proxy Statement**[1017](index=1017&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=101&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning security ownership by major shareholders and management is incorporated by reference from the company's 2024 Proxy Statement - Information is **incorporated by reference** from the forthcoming **2024 Proxy Statement**[1018](index=1018&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=101&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's 2024 Proxy Statement - Information is **incorporated by reference** from the forthcoming **2024 Proxy Statement**[684](index=684&type=chunk) [Principal Accounting Fees and Services](index=101&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information detailing fees paid to the principal accountant is incorporated by reference from the company's 2024 Proxy Statement - Information is **incorporated by reference** from the forthcoming **2024 Proxy Statement**[1019](index=1019&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=102&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists Form 10-K exhibits, noting consolidated financial statements are in Item 8 and financial statement schedules are omitted due to inapplicability or prior inclusion - The consolidated financial statements are located in **Item 8** of the report[1040](index=1040&type=chunk) - Financial statement schedules have been **omitted** because the information is **not applicable** or is included elsewhere in the report[1021](index=1021&type=chunk) [Form 10-K Summary](index=103&type=section&id=Item%2016.%20Form%2010-K%20Summary) This optional section for a Form 10-K summary has not been utilized by the company - **No summary** is provided in this optional section[1024](index=1024&type=chunk)

BRAZE REPORTS FISCAL YEAR AND FOURTH QUARTER 2024 RESULTS Fourth quarter revenue grew 33% year-over-year to $131.0 million Achieved dollar-based net retention of 117% for the trailing 12 months Introduced first quarter and full year fiscal 2025 guidance NEW YORK -- (BUSINESSWIRE) -- March 27, 2024 -- Braze (Nasdaq: BRZE) the leading customer engagement platform that empowers brands to Be Absolutely Engaging , today announced results for its fiscal year ended January 31, 2024. TM "Fiscal 2024 marked another ...

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NEW YORK--(BUSINESS WIRE)--Braze (Nasdaq: BRZE), the leading customer engagement platform that empowers brands to Be Absolutely Engaging™, today announced strategic leadership appointments and new customer wins on the heels of a significant financial milestone. As previously announced, the company recently passed $500 million of Committed Annual Recurring Revenue (CARR), demonstrating the continued demand for Braze as brands recognize the critical role of customer engagement in driving growth, loyalty, and ...

akinbostanci Investment Thesis Braze (NASDAQ:BRZE) stock's expectations are relatively muted, even as the company is delivering strong results. I make the case that this stock is now on the point of inflection. Succinctly put, I believe that Braze could within the next 12 months, be on a forward run-rate of +5% non-GAAP operating margin. Consequently, I argue that in the next twelve months, this business will grow its revenues by at least 25% CAGR and that paying 10x forward sales, for a profitable clou ...

AzmanL/E+ via Getty Images Summary Readers may find my previous coverage via this link. My previous rating was a hold, as I believed any further upside for Braze (NASDAQ:BRZE) would require multiples to re-rate even higher, even though I was optimistic about the business. My conclusion back then was to wait for a cheaper valuation or when there was a visible catalyst in sight before buying the stock again. I am revising my rating from hold to buy as I now believe BRZE is able to continue growing the bus ...

One stock that might be an intriguing choice for investors right now is Braze, Inc. (BRZE) . This is because this security in the Technology Services space is seeing solid earnings estimate revision activity, and is in great company from a Zacks Industry Rank perspective.This is important because, often times, a rising tide will lift all boats in an industry, as there can be broad trends taking place in a segment that are boosting securities across the board. This is arguably taking place in the Technology ...

Financial Data and Key Metrics Changes - Revenue for the third quarter increased by 33% year-over-year to $124 million, with a contribution of approximately $3.5 million from the North Star acquisition [26][39] - Non-GAAP gross margin improved by 170 basis points year-over-year to 71.4%, driven by personnel efficiencies and cost optimization [84] - Non-GAAP operating loss was $8.9 million, an improvement from a loss of $17.3 million in the prior year quarter [61] - Cash used in operations was $2 million, significantly reduced from $23.9 million in the prior year quarter [31] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 95% of total revenue, with dollar-based net retention at 118% overall and 121% for large customers [57][58] - The total customer count increased by 17% year-over-year to 2,011 customers [27] - The number of large customers spending at least $500,000 annually grew by 28% year-over-year to 189, contributing 58% to total annual recurring revenue (ARR) [82] Market Data and Key Metrics Changes - Revenue outside the US contributed 44% of total revenue, up from 43% in the prior year quarter [28] - Total remaining performance obligation was $560 million, up 37% year-over-year [83] Company Strategy and Development Direction - The company is focused on product innovation and driving operational efficiency, with plans to achieve positive non-GAAP operating income and free cash flow by the end of fiscal year 2025 [89] - The strategy includes capitalizing on the legacy vendor replacement cycle and vendor consolidation trends [43][146] - New product innovations unveiled at the Forge conference include low-code and AI-driven features aimed at enhancing customer engagement [19][54] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains uncertain, but customer engagement is viewed as a business imperative, especially during challenging times [16] - Management expressed confidence in the company's ability to grow despite macroeconomic headwinds, emphasizing the importance of efficiency over growth in current budgets [70][104] - The company anticipates continued demand for customer engagement solutions, although sales cycles are elongated and marketing budgets are constrained [86] Other Important Information - The company hosted its annual flagship customer conference, Forge, which attracted nearly 4,000 attendees and showcased best practices in customer engagement [11][41] - The company made its first commitment to a virtual power purchase agreement as part of its climate commitment [25] Q&A Session Summary Question: Can you discuss deal sizes and enterprise traction? - Management noted challenges in the SMB segment, with elevated logo losses but overall dollar losses within budget tolerances. Enterprise traction remains strong due to longer planning horizons [68][70] Question: What are the trends in renewal conversations? - There are more renewal dollars expected in Q4, with bookings showing better-than-expected linearity [80] Question: How are existing enterprise customers approaching next year's budget? - Management indicated that marketing budgets remain flat or constrained, with CFOs scrutinizing expenditures [103] Question: What drove the upside in Q4 guidance? - The upside was attributed to better linearity and execution in a challenging macro environment [117] Question: How did the Forge event perform in terms of pipeline generation? - The event helped accelerate deals and improve customer relationships, with a focus on AI capabilities [125][156]