I wrote about Braze, Inc. (NASDAQ: BRZE ) previously with a buy rating as I was positive about the business growth prospect, supported by strong underlying growth drivers. After looking at the latest 4Q25 results, I am Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other ...

Financial Position - As of January 31, 2025, the company had cash, cash equivalents, and marketable securities totaling $514.0 million, with $430.5 million invested in U.S. government securities, foreign securities, and corporate debt securities [358]. - The company’s revenue is primarily denominated in U.S. dollars, with only sales in Japan denominated in Yen, minimizing significant foreign currency risk [361]. - The company has not engaged in hedging of foreign currency transactions but may consider it in the future [362]. - The company’s market risk exposure is primarily due to fluctuations in interest rates, with a hypothetical 10% change in interest rates not expected to materially impact consolidated financial statements [359]. Employee Relations - The company has not experienced any work stoppages and considers its relations with employees to be good, with a total of 1,699 full-time employees as of January 31, 2025 [95]. Social Responsibility - The company established its Social Impact Department in 2021, which includes the Braze for Impact Fund and various corporate social responsibility initiatives [88]. - The company is a member of the Pledge 1% movement, reserving up to 964,647 shares of Class A common stock for donation to fund social impact initiatives through 2031 [89]. - The company maintains an ESG reporting function, including an annual greenhouse gas emissions audit and sustainability commitments [93]. Economic Factors - The company does not believe inflation has materially affected its business, but acknowledges potential risks if costs become subject to inflationary pressures [357]. Corporate Culture - The company’s culture and core values are designed to foster a mission-driven environment that delivers tangible financial and operational benefits [86].

Core Insights - Braze's fiscal 2025 fourth-quarter results significantly exceeded analysts' expectations, leading to a notable increase in stock price [1] - The company provided strong guidance for fiscal 2026, further boosting investor confidence [1] Financial Performance - Braze reported revenue of $160.4 million for the quarter, a nearly 23% increase year-over-year, surpassing the consensus estimate of $155.7 million [2] - The non-GAAP earnings per share were $0.12, a substantial improvement from a loss of $0.04 in the previous year, and well above the consensus estimate of $0.05 [3] - The company achieved a non-GAAP gross profit margin of 69.9% by the end of the fiscal year [3] Customer Growth - Braze ended fiscal 2025 with 2,296 customers, marking a 22% increase from the previous year [4] - The number of large customers contributing annual recurring revenue of $500,000 or more rose from 202 to 247 [4] Strategic Developments - The CEO highlighted fiscal 2025 as a milestone year, emphasizing customer growth and advancements in AI and machine learning [5] - Free cash flow improved from a loss of $3.5 million in the previous year to $15.2 million [5] Future Outlook - Management projects sales for fiscal 2026 to be between $686 million and $691 million, indicating a 16% increase at the midpoint [6] - The positive fourth-quarter results and optimistic guidance suggest a promising trajectory for the company [6]

Core Viewpoint - Braze Inc (NASDAQ:BRZE) has shown resilience against the broader market selloff, with a notable increase of 10.7% to $40.64 after exceeding earnings estimates for the fourth quarter and providing a positive full-year earnings forecast [1] Group 1: Financial Performance - The company beat both top-line and bottom-line estimates in the fourth quarter, contributing to the stock's price increase [1] - Citigroup has adjusted its price target for Braze to $50, reflecting a "conservative growth outlook," while Wells Fargo raised its target from $50 to $55 [1] Group 2: Stock Performance - Braze's stock has surpassed its 40-day moving average and is trading at its highest levels since early February, despite being down approximately 4% year-to-date and 9% year-over-year [2] - The stock has experienced a significant increase in options trading, with 4.6 times its average daily options volume, indicating heightened investor interest [2] Group 3: Market Dynamics - Some of the gains in Braze's stock price may be attributed to short covering, as short interest, while decreasing, still represents 5.3% of the stock's available float [3]

Braze, Inc. (NASDAQ:BRZE) Q4 2025 Earnings Conference Call March 27, 2025 4:30 PM ET Company Participants Christopher Ferris - Head of IR William Magnuson - Co-Founder and CEO Isabelle Winkles - CFO Conference Call Participants Ryan MacWilliams - Barclays Arjun Bhatia - William Blair David Hynes - Canaccord Genuity Gabriela Borges - Goldman Sachs Brent Bracelin - Piper Sandler Brian Peterson - Raymond James Derrick Wood - TD Cowen Nick Altmann - Scotiabank Scott Berg - Needham Taylor McGinnis - UBS Michael ...

Core Insights - Braze reported strong fiscal Q4 2025 results, exceeding revenue and earnings expectations, but experienced a decline in its dollar-based net retention rate [2][8]. Financial Performance - Revenue for Q4 2025 was $160.4 million, surpassing analysts' expectations of $155 million, and reflecting a 22.5% increase from $131.0 million in Q4 2024 [3][6]. - Non-GAAP adjusted EPS was $0.12, significantly above the anticipated $0.05, marking a positive surprise of 140% [7]. - Free cash flow turned positive at $15.2 million compared to negative $3.5 million in the previous year [8]. - Non-GAAP gross margin improved to 69.9%, up from 67.9% in the prior year, indicating better cost management [3][8]. Business Overview - Braze operates a leading customer engagement platform that integrates data analysis, personalized messaging, and omnichannel support, enhancing customer interactions [4]. - The company is focusing on improving platform features and expanding AI capabilities [5]. Strategic Developments - Braze announced an agreement to acquire OfferFit to enhance its AI capabilities and improve personalization and cross-channel engagement [9]. - A strategic partnership with Shopify was also announced earlier in the month [9]. Future Guidance - For fiscal 2026, Braze projects revenue between $686 million and $691 million, up from $593.4 million in fiscal 2025, indicating strong growth confidence [10].

Core Viewpoint - Braze, Inc. reported quarterly earnings of $0.12 per share, significantly exceeding the Zacks Consensus Estimate of $0.05 per share, and showing an improvement from a loss of $0.04 per share a year ago, indicating strong performance in the recent quarter [1][2] Financial Performance - The company achieved revenues of $160.4 million for the quarter ended January 2025, surpassing the Zacks Consensus Estimate by 3.10% and reflecting a year-over-year increase from $130.96 million [2] - Over the last four quarters, Braze has consistently exceeded consensus EPS estimates, achieving this four times [2] Stock Performance - Braze shares have declined approximately 10.9% since the beginning of the year, contrasting with the S&P 500's decline of 2.9% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future due to unfavorable estimate revisions [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.03 on revenues of $157.98 million, while for the current fiscal year, the estimate is $0.27 on revenues of $684.84 million [7] - The outlook for the Internet - Software industry, where Braze operates, is currently in the top 30% of Zacks industries, suggesting a favorable environment for potential growth [8]

Financial Performance - Braze's Q4 Fiscal 2025 revenue reached $160.4 million, representing a 22.5% year-over-year growth and a 5.5% sequential increase[10] - The company's GAAP gross margin was 69.3%, a 210 basis points increase year-over-year, while the non-GAAP gross margin was 69.9%, up 200 basis points year-over-year[10] - Braze reported a GAAP operating loss of $21.6 million, an improvement from the $32.3 million loss in the prior year quarter; the non-GAAP operating income was $7.9 million, compared to a loss of $7.5 million in the prior year quarter[10] - Net cash provided by operating activities was $17.1 million, compared to $3.8 million in the prior year quarter, and free cash flow was $15.2 million, a significant increase from $(3.5) million in the prior year quarter[10] Customer Metrics - Braze's customer base grew to 2,296 as of January 31, 2025, from 2,044 in the prior year quarter, and the dollar-based net retention rate was 111%[3,10] Future Outlook - For Q1 Fiscal Year 2026, Braze projects revenue between $158.0 million and $159.0 million, and for the full Fiscal Year 2026, revenue is expected to be between $686.0 million and $691.0 million[30] - The company anticipates a non-GAAP operating income between $0.0 million and $1.0 million for Q1 Fiscal Year 2026, and between $25.5 million and $29.5 million for the full Fiscal Year 2026[30] - Braze expects a non-GAAP net income between $4.5 million and $5.5 million for Q1 Fiscal Year 2026, and between $34.0 million and $38.0 million for the full Fiscal Year 2026[30] Strategic Initiatives - Braze announced an agreement to acquire OfferFit, an AI decisioning company, for $325 million in a combination of cash and Braze Class A common stock[11]

Financial Data and Key Metrics Changes - The company reported Q4 revenue of $160.4 million, representing a 22% year-over-year increase and a 5% increase from the prior quarter [7][19] - Non-GAAP operating income was $8 million, achieving a non-GAAP operating margin of 5%, up from a negative 5.7% in the same quarter last year [7][23] - Non-GAAP net income was $12 million, or $0.12 per share, compared to a loss of $3 million, or a loss of $0.04 per share in the prior year [24] - Free cash flow for the quarter was $15 million, compared to a negative free cash flow of $4 million in the prior year [24] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 96% of total revenue in Q4, with the remaining 4% from professional services and onboarding fees [19] - The total customer count increased by 12% year-over-year to 2,296 customers, with large customers (spending at least $500,000 annually) growing by 22% to 247 [19][20] - Dollar-based net retention was 111%, with large customers showing a retention rate of 114% [20] Market Data and Key Metrics Changes - Revenue from outside the U.S. contributed 45% to total revenue, consistent with the prior quarter and up from 44% in the same quarter last year [20] - The total remaining performance obligation was $793 million, up 24% year-over-year [21] Company Strategy and Development Direction - The company aims to become the leading customer engagement platform globally, focusing on profitable growth while reinvesting in business expansion [8][18] - The acquisition of Offerfit, valued at $325 million, is expected to enhance AI-driven customer engagement capabilities [15][16] - The company is focusing on the retail and consumer goods vertical, which accounts for about 20% of its business, by enhancing e-commerce features and integrations [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing legacy vendor replacement cycle and vendor consolidation trends, which are expected to create more market opportunities [9][10] - The company anticipates continued positive quarterly non-GAAP operating income and free cash flow going forward [8] - Management acknowledged the evolving macroeconomic environment but noted no immediate concerns affecting demand trends [67] Other Important Information - Non-GAAP gross profit for Q4 was $112 million, with a gross margin of 69.9%, up from 67.9% in the prior year [21][22] - The company plans to update guidance post-acquisition of Offerfit, which is expected to be dilutive to non-GAAP operating income margins in the fiscal year [26][28] Q&A Session Summary Question: Insights on Offerfit acquisition and AI agents - Management highlighted that Offerfit's technology excels in generating maximum uplift in marketing performance, which is crucial for high-end market customers [32][34] Question: Adjustments to guidance philosophy due to macro conditions - Management indicated that they have adapted to macro disruptions and will maintain a cautious guidance approach [37][38] Question: Next frontier of personalization - Management discussed the evolution of personalization strategies, emphasizing the importance of automated experimentation and AI-driven decision-making [42][46] Question: Expansion trends from new customer cohorts - Management confirmed that newer customer cohorts are performing better than previous cohorts, indicating positive expansion trends [52] Question: Business outcomes for customers using Offerfit - Management noted that Offerfit enhances message relevance and effectiveness, leading to better customer engagement outcomes [56][59] Question: Mix of cash and stock in the acquisition - The acquisition deal consists of 42% equity and the remainder in cash [61] Question: Demand trends and customer spending - Management reported no significant changes in demand trends despite macroeconomic uncertainties [67]

Executive Transition and Termination - Executive will transition duties starting February 1, 2025, with employment terminating on June 1, 2025[4] - During the Transition Period, Executive will continue to receive base salary and participate in employee benefit plans[4] - Executive's termination on June 1, 2025, or earlier, will not entitle him to severance benefits unless specified[5] - Braze will pay Executive a lump sum for accrued but unpaid base salary by the next regular payroll date after the Termination Date[8] - Executive will be eligible for continued participation in the Company's health plan until the end of the month of the Termination Date[8] - Vesting of Executive's equity awards will accelerate if termination occurs due to death or disability before the Termination Date[8] - Effective on the Termination Date, Executive will cease participation in Company benefit plans and is not due any additional compensation beyond what is specified[12] Consulting Agreement - A consulting agreement will be effective from June 2, 2025, contingent on Executive meeting specific conditions[8] - The consulting agreement with Myles Kleeger will commence on June 2, 2025, contingent upon the execution of the Separation Agreement and Second Release[31] - The consultant will provide services as an independent contractor and will not be eligible for employee benefits[31] - Consultant will receive a one-time payment of $17,000 for services rendered[34] - Consultant's equity awards will vest until November 30, 2025, unless terminated earlier[34] - If terminated for cause, Consultant's equity awards will cease vesting immediately[35] - Consultant may be unilaterally terminated with five days' notice, with accelerated vesting of equity awards[35] - Consultant must return all company property upon termination of the agreement[36] Legal and Compliance - Executive waives any claims against Braze and its affiliates related to employment prior to signing the Agreement[7] - Executive agrees not to participate in class action lawsuits against Braze[9] - The Agreement includes a release of claims that will remain effective despite any later discovery of different facts[10] - Executive must comply with restrictive covenants, including non-competition and confidentiality agreements, as a material term of the Agreement[11] - In the event of a material violation of the Restrictive Covenants, Executive shall forfeit benefits described in Section 3(b) and return amounts received, except for $500[11] - Non-competition covenants will remain in effect during the term of the consulting agreement and for one year thereafter[31] - Non-solicitation covenants will remain in effect during the term of the consulting agreement and for 18 months after its termination[31] - The company reserves the right to enforce the terms of the consulting agreement in any appropriate forum[23] - Any breach of specific sections may result in irreparable harm to the company, allowing for injunctions[39] Agreement Execution and Review - Executive has 21 days to review the Agreement and can revoke it within seven days of signing[17] - The Agreement will become effective on the eighth day following its execution unless revoked[17] - The Agreement contains the entire understanding between the Parties regarding the subject matter and cannot be altered except in writing[13] - The agreement is governed by the laws of the State of New York, and disputes will be resolved through binding arbitration[13] - The agreement may be executed in counterparts, constituting one binding agreement[39] Financial Obligations - The company confirms that all amounts due to the consultant, including wages and benefits, have been paid, except for any pending payroll[24] - The company has no obligation to provide additional compensation or benefits beyond the specified payments[34] - Consultant is responsible for reporting and remitting taxes associated with the Consultant Payment[34] - Executive acknowledges that the benefits received under the Agreement exceed any payment or benefit to which Executive would otherwise be entitled[17] - The benefits provided under the agreement exceed any payments or benefits the consultant would otherwise be entitled to[26]