Financial Data and Key Metrics Changes - The company reported revenue of $191 million for the fiscal third quarter 2026, representing a year-over-year increase of 25.5% and a sequential increase of 6% [7][23] - Non-GAAP operating margins improved by over 400 basis points year-over-year, with non-GAAP operating income of $5 million, or 2.7% of revenue, compared to a non-GAAP operating loss of $2 million in the prior year quarter [7][28] - Free cash flow for the quarter was $18 million, compared to a negative free cash flow of $14 million in the prior year quarter [29] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 95% of total revenue, with the remaining 5% from professional services and onboarding fees [23] - The Braze AI Decisioning Studio contributed $4.8 million in revenue, indicating a growing impact of AI-driven solutions on overall revenue [23] Market Data and Key Metrics Changes - The total customer count increased by 14% year-over-year to 2,528, with 317 new customers added compared to the same period last year [23][24] - Revenue outside the U.S. contributed 45% of total revenue, consistent with previous quarters [24] Company Strategy and Development Direction - The company aims to position itself as the global standard for omnichannel customer engagement, leveraging AI technology to enhance customer experiences [7][9] - There is a focus on expanding into new customer verticals and enhancing product offerings through AI capabilities [4][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding continued market demand and strong pipeline generation, indicating a positive outlook for fiscal year 2027 [7][8] - The company anticipates a revenue range of $197.5-$198.5 million for the fourth quarter, reflecting a year-over-year growth rate of approximately 23% [30] Other Important Information - The company achieved its strongest quarter of customer additions in three years, with significant growth in large customers spending over $500,000 annually [8][24] - The company reported a total remaining performance obligation of $891 million, up 24% year-over-year, indicating strong future revenue visibility [26] Q&A Session Summary Question: Insights on the Braze healthcare customer using Braze Agent Console - Management highlighted the agility of deploying AI agents within the Canvas environment, allowing for enhanced customer interactions and real-time processing [35][37] Question: Drivers of improving trends in key metrics - Management attributed improvements to ongoing productivity enhancements within the sales organization and effective mitigation of downsell and churn [40][42] Question: Factors driving momentum in legacy replacement cycle - Management noted strong competitive positioning and regional investments as key drivers of momentum in customer acquisition [78] Question: Impact of AI on growth algorithm - Management discussed the monetization of AI, indicating potential upside as AI capabilities are integrated into the platform [54][56] Question: Customer interest in ChatGPT integration - Management emphasized the importance of first-party data and customer engagement strategies in the evolving app ecosystem, highlighting the potential for new channels [68][70]

Financial Data and Key Metrics Changes - The company reported revenue of $191 million for the fiscal third quarter 2026, representing a year-over-year increase of 25.5% and a 6% increase from the prior quarter [6][22] - Non-GAAP operating margins improved by over 400 basis points year-over-year, with non-GAAP operating income of $5 million, or 2.7% of revenue, compared to a non-GAAP operating loss of $2 million in the prior year quarter [6][26] - Free cash flow for the quarter was $18 million, a significant improvement from a negative free cash flow of $14 million in the prior year quarter [6][27] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 95% of total revenue, with the remaining 5% from professional services and onboarding fees [22] - The company added 106 new customers sequentially and 317 year-over-year, bringing the total customer count to 2,528, a 14% increase [6][22] - Large customers, defined as those spending at least $500,000 annually, grew by 29% year-over-year to 303, contributing 63% to total ARR [23] Market Data and Key Metrics Changes - Revenue outside the U.S. contributed 45% of total revenue, consistent with previous quarters [23] - The company achieved a dollar-based net retention rate of 108% across all customers and 110% for large customers [23][24] - The total remaining performance obligation was $891 million, up 24% year-over-year, indicating strong future revenue visibility [24] Company Strategy and Development Direction - The company aims to position itself as the global standard for omnichannel customer engagement, leveraging AI-driven solutions to enhance customer experiences [6][10] - The introduction of new AI capabilities, such as the Braze AI Decisioning Studio, is expected to drive future growth and customer engagement [19][22] - The company is focused on innovation and product development, particularly in AI, to maintain a competitive edge in the customer engagement landscape [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued market demand and strong bookings across various verticals and geographies [6] - The company anticipates a revenue range of $197.5-$198.5 million for the fourth quarter, reflecting a year-over-year growth rate of approximately 23% [28] - Management highlighted the importance of first-party data and customer engagement strategies in navigating the evolving market landscape [57] Other Important Information - The company delivered 102.5 billion messages during Cyber Week, showcasing the scalability and reliability of its platform [10] - The integration of AI into customer engagement strategies is seen as a key driver for future growth and operational efficiency [11][12] - The company is committed to maintaining a long-term profitability framework, targeting a non-GAAP operating income margin of 8% for fiscal year 2027 [29] Q&A Session Summary Question: Insights on the Braze healthcare customer using Braze Agent Console - Management highlighted the agility of deploying purpose-built agent frameworks into existing systems, enhancing customer interactions through AI [31][32] Question: Drivers of improving trends in key metrics - Management attributed improvements to ongoing productivity enhancements, effective mitigation of downsell activity, and strong sales organization performance [36] Question: Factors driving momentum in legacy replacement cycle - Management noted that the current market environment is conducive to enterprise replacement cycles, with increased awareness and differentiation for Braze [37][39] Question: Early reception of AI Decisioning Studio - Management reported strong pipeline generation and customer wins, indicating positive early traction for the AI Decisioning Studio [64]

Core Insights - Braze, Inc. reported strong third-quarter earnings, exceeding revenue estimates and raising fiscal 2026 guidance [1][4] Financial Performance - Adjusted earnings per share for the quarter were six cents, meeting analyst expectations [2] - Quarterly revenue reached $190.84 million, surpassing the Street estimate of $184.08 million, reflecting a revenue growth of 25.5% [2][4] - Subscription revenue was $181.6 million, up from $146.3 million in the same quarter of the previous fiscal year [6] - Professional services and other revenue increased to $9.2 million from $5.8 million year-over-year [6] - Non-GAAP gross margin was 69.1%, slightly down from 70.5% in the same quarter last year [6] Guidance and Outlook - The company raised its fiscal 2026 adjusted EPS guidance to a range of 42 to 43 cents, compared to the analyst estimate of 41 cents [4] - Fiscal revenue outlook was increased to between $730.5 million and $731.5 million, exceeding the previous estimate of $717.7 million [4] Customer Metrics - Total customer count grew by 14%, with large customers increasing by 29% [6] - Trailing 12-month dollar-based net retention stabilized at 108% [6] Stock Performance - Following the earnings report, Braze's stock price increased by 8.12%, reaching $33.14 in extended trading [5]

Financial Performance - Braze's quarterly revenue run rate is $763 million [3] - Q3'26 revenue reached $1908 million, a 255% year-over-year increase [14, 22] - GAAP gross margin was 672%, a decrease of 260 basis points year-over-year, while non-GAAP gross margin was 691%, down 140 basis points year-over-year [14, 25] - The dollar-based net retention rate was 108% [4, 14, 27] - GAAP operating loss was $375 million, compared to a loss of $326 million in the prior year quarter; non-GAAP operating income was $51 million, compared to a loss of $22 million in the prior year quarter [14] - Net cash provided by operating activities was $210 million, compared to net cash used in operating activities of $114 million in the prior year quarter [14] - Free cash flow was $178 million, compared to $(142) million in the prior year quarter [14, 33] Customer Growth - The customer count increased to 2,528 as of October 31, 2025, from 2,211 in the prior year quarter, representing a 14% year-over-year growth [4, 14, 31] - Customers with over $500K ARR experienced a 29% year-over-year growth [31] Future Guidance - For Q4'26, revenue is projected to be between $1975 million and $1985 million; for the full fiscal year 2026, revenue is expected to be between $7305 million and $7315 million [38] - Non-GAAP operating income for Q4'26 is guided to be $120 million - $130 million, and for the full year, $260 million - $270 million [38]

Financial Performance - Revenue for the fiscal third quarter 2026 was $190.8 million, a 25.5% increase year-over-year from $152.1 million[2] - Braze reported Q3 2025 revenue of $190,842,000, a 25.5% increase from $152,052,000 in Q3 2024[30] - Braze's total revenue for the nine months ended October 31, 2025, was $533,012,000, up 23.1% from $433,010,000 in the same period of 2024[30] - Guidance for fiscal Q4 2026 projects revenue between $197.5 million and $198.5 million, with full-year revenue guidance of $730.5 million to $731.5 million[8] Customer Metrics - Total customer count grew to 2,528, representing a 14% increase, with large customers (ARR of $500,000 or more) increasing by 29% to 303[2] - Trailing Twelve Month Dollar Based Net Retention stabilized at 108%, down from 113% in the previous year[2] Profitability and Margins - GAAP gross margin was 67.2%, a decrease from 69.8% in the same quarter last year[2] - Non-GAAP operating income was $5.1 million, compared to a non-GAAP operating loss of $2.2 million in the prior year[6] - The net loss attributable to Braze, Inc. for Q3 2025 was $35,998,000, compared to a net loss of $27,911,000 in Q3 2024, indicating a worsening loss margin[30] - The company reported a net loss per share of $0.33 for Q3 2025, compared to $0.27 for Q3 2024[30] - The company reported a GAAP operating margin of -19.7% for the three months ended October 31, 2025, compared to -21.4% in the same period of 2024, showing a positive trend[41] - The company’s non-GAAP operating margin improved to 2.7% for the three months ended October 31, 2025, compared to -1.4% in the same period of 2024, indicating operational efficiency gains[41] Cash Flow and Investments - Net cash provided by operating activities was $21.0 million, a significant improvement from net cash used of $11.4 million in the previous year[6] - Operating cash flow for the nine months ended October 31, 2025, was $52,063 thousand, significantly higher than $19,597 thousand in the same period of 2024, representing a growth of 165.5%[37] - Cash and cash equivalents increased to $101,811 thousand at the end of the period, compared to $61,842 thousand at the end of the previous period, marking a rise of 64.5%[37] - Cash used in investing activities was $43,444 thousand for the nine months ended October 31, 2025, compared to $35,629 thousand in the same period of 2024, indicating an increase of 22.5%[37] Innovations and Market Position - The company introduced several innovations under BrazeAI™, including BrazeAI Operator™ and BrazeAI Decisioning Studio™, enhancing customer engagement capabilities[1] - Braze was recognized as a Leader in the Gartner® Magic Quadrant for Multichannel Marketing Hubs for the third consecutive year[12] - Braze has been recognized as a leader in marketing technology and received multiple awards in 2025, enhancing its market position[26] Assets and Equity - Total assets increased to $1,041,285 thousand as of October 31, 2025, up from $870,998 thousand on January 31, 2025, representing a growth of approximately 19.6%[34] - Total stockholders' equity increased to $602,032 thousand as of October 31, 2025, compared to $474,861 thousand on January 31, 2025, a rise of 26.8%[34] Deferred Revenue and Performance Obligations - Remaining performance obligations as of October 31, 2025, totaled $891.4 million, with $572.7 million classified as current[2] - Deferred revenue rose to $271,397 thousand as of October 31, 2025, compared to $239,976 thousand on January 31, 2025, an increase of 13.1%[34] Risks and Challenges - The company continues to face risks related to market conditions and competition, which may impact future revenue growth[21]

Core Viewpoint - Braze, Inc. (BRZE) is a digital marketing platform that is experiencing growth, and there is speculation regarding whether its stock is overpriced like many other tech stocks [1]. Company Analysis - The company is set to report its Q3 Fiscal 2026 results in a few weeks, which may provide further insights into its financial performance and growth trajectory [1]. - The analysis approach focuses on value investing, emphasizing an owner's mindset and a long-term investment horizon [1]. Investment Perspective - The author does not engage in writing sell articles or recommending short positions, indicating a preference for long-term investment strategies [1].

Core Insights - Solel Partners LP has acquired a new stake in Braze, purchasing 745,900 shares valued at approximately $21.2 million during the third quarter, representing 4.1% of the fund's $519.8 million in reportable U.S. equity assets [1][2]. Company Overview - Braze, Inc. specializes in customer engagement solutions, leveraging a comprehensive software platform to deliver personalized messaging and optimize user journeys for enterprises [6]. - As of the latest market close, Braze's stock price is $28.74, with a market capitalization of $3.2 billion, trailing a revenue of $654.6 million and a net income loss of $108.8 million over the trailing twelve months (TTM) [4][6]. Financial Performance - Braze's revenue for the latest quarter increased nearly 24% to $180.1 million, driven by subscription growth and customer expansion, despite GAAP losses widening to $27.8 million [10]. - The company maintains over $360 million in cash and cash equivalents, indicating a solid liquidity position [10]. Market Position - Braze's stock has decreased by 21.2% over the past year, underperforming the S&P 500, which has risen nearly 15% during the same period [3]. - The company operates on a subscription-based SaaS model, providing recurring revenue streams and serving enterprise and mid-market clients globally [9]. Investment Considerations - Solel Partners' investment in Braze is notable given the fund's typical focus on stable, cash-rich companies, suggesting a potential belief in Braze's future growth despite its current challenges [7][11].

Core Insights - Braze, Inc. (BRZE) has a strong history of exceeding earnings estimates, with an average surprise of 220.00% over the last two quarters, indicating potential for continued performance in upcoming reports [1][2]. Earnings Performance - In the most recent quarter, Braze reported earnings of $0.15 per share, surpassing the expected $0.03 per share, resulting in a surprise of 400.00% [2]. - For the previous quarter, the company reported $0.07 per share against an expectation of $0.05 per share, yielding a surprise of 40.00% [2]. Earnings Estimates and Predictions - Estimates for Braze have been trending upward, supported by its history of earnings surprises, and the stock currently has a positive Zacks Earnings ESP of +10.53%, suggesting bullish sentiment among analysts [5][8]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) indicates a strong likelihood of another earnings beat [8]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [6]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7].

Core Insights - Braze's stock price has decreased to $27.24, resulting in a 16.5% loss for shareholders, while the S&P 500 has increased by 19.5% [1] - The company powers interactions with 6.2 billion monthly active users, providing a platform for brands to engage customers through personalized messaging [2] Financial Performance - Braze's billings reached $177.2 million in Q2, with a year-on-year growth average of 24.4% over the last four quarters, indicating strong customer demand [4] - Analysts project a 19.2% revenue growth for Braze over the next 12 months, which, while lower than the previous two years' 26.6% annualized growth rate, still reflects healthy market expectations [6] Operational Challenges - The company has an average operating margin of negative 20.3% over the last year due to high costs associated with capturing market share [8] - Despite the operating losses, the aggressive strategy has led to significant revenue growth, and there is optimism about reaching profitability as the company scales [8]

Core Insights - HubSpot is leveraging AI advancements to enhance its marketing tools, particularly through its AI assistant, Breeze, which automates various marketing functions [1][7] - The company reported strong financial results for Q2 2025, with revenues of $760.9 million, a 19% year-over-year increase, and subscription revenue of $744.5 million, also up 19% [9] - Despite a year-to-date stock decline of 35%, analysts remain optimistic about HubSpot's ability to compete in the evolving AI landscape, with a Strong Buy consensus rating [10][11] Company Overview - HubSpot, established in 2006, offers a cloud-based marketing software platform that addresses challenges in CRM, social media, content management, and SEO [2] - The platform is popular among inbound sales teams, direct marketers, and customer service professionals [2] AI Integration - HubSpot is utilizing agentic AI to allow users to create and modify their own AI tools, enhancing flexibility in online marketing [7] - The company is developing various AI agents, including prospecting, closing, personalization, and data agents, to automate time-consuming tasks [7] Financial Performance - In Q2 2025, HubSpot's revenue reached $760.9 million, exceeding expectations by $20.8 million, with earnings of $2.19 per share, surpassing forecasts by 7 cents [9] - The company had $1.9 billion in liquid assets at the end of Q2 [9] Market Position and Analyst Outlook - Analysts, including Ryan MacWilliams from Wells Fargo, believe HubSpot is well-positioned to monetize agentic AI and maintain a competitive edge due to its established customer base and data [11] - The stock has a price target of $685, indicating a potential upside of 51.5% over the next year, supported by a Strong Buy consensus from 29 analysts [11]