Financial Data and Key Metrics Changes - Braze reported Q1 2026 revenue of $162.1 million, representing a nearly 20% year-over-year increase [6][18] - Non-GAAP operating margin improved by over 900 basis points year-over-year, with non-GAAP net income of $7 million and free cash flow of nearly $23 million [6][24] - Total remaining performance obligation (RPO) was $829.3 million, up 26% year-over-year, while current RPO increased by 24% year-over-year to $522 million [20] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 96% of total revenue, with the remaining 4% from professional services and onboarding fees [18] - The customer count rose to 2,342, an increase of 11% year-over-year, with large customers (spending at least $500,000 annually) growing by 24% year-over-year to 262 [18][19] - Dollar-based net retention (DBNR) was 109 overall and 112 for large customers, indicating strong customer expansion [19] Market Data and Key Metrics Changes - Revenue outside the U.S. contributed 46% of total revenue, up from 45% in the previous quarter [20] - The company secured new business wins across various sectors, including fintech, luxury retail, and healthcare, demonstrating broad market strength [7][9] Company Strategy and Development Direction - Braze aims to become the leading customer engagement platform globally, focusing on AI-driven solutions and first-party data utilization [6][10] - The acquisition of OfferFit is expected to enhance Braze's AI capabilities and customer engagement strategies, allowing for more personalized experiences [12][14] - The company is committed to investing in technology and community to elevate customer engagement practices [11] Management's Comments on Operating Environment and Future Outlook - Management noted that global trade concerns have not significantly impacted deal cycles, and they expect continued momentum despite a noisy macro environment [6][7] - The company anticipates that the legacy replacement cycle and vendor consolidation trends will persist, providing opportunities for market share growth [9][10] - Management expressed confidence in achieving sustained profitable growth while navigating economic uncertainties [6][27] Other Important Information - Braze's non-GAAP gross profit for the quarter was $112 million, with a gross margin of 69.3%, up from 67.9% in the prior year [21] - The company ended the quarter with approximately $540 million in cash and equivalents, indicating strong liquidity [24] Q&A Session Summary Question: Reconciling sequential growth and CRPO dynamics - Management acknowledged that CRPO is sensitive to renewal dollars and emphasized that revenue is the key metric to watch for macro stabilization [32][34] Question: Performance of Project Catalyst - Project Catalyst is in private beta, and while specific uplift case studies are not available, initial results show promise in optimizing customer engagement strategies [43][45] Question: Renewal cadence and OfferFit feedback - Q1 was a heavy renewal quarter, with expectations for a drop in Q2 and Q3, followed by another increase in Q4 [63] - Early feedback on OfferFit has been positive, with strong interest from customers and successful presentations at events [55][57] Question: Pricing and packaging changes - The new pricing model has relaxed data point limits, improving customer flexibility and reducing friction in sales cycles [70][72] Question: Impact of OfferFit on EBIT guidance - OfferFit is expected to contribute significantly to EBIT, with around 80% of the impact attributed to its integration [74][76]

[Financial & Business Highlights](index=1&type=section&id=Financial%20%26%20Business%20Highlights) Braze reported a strong start to fiscal year 2026, with Q1 revenue growing 19.6% year-over-year to $162.1 million, achieving non-GAAP operating profitability of $2.8 million, and strategically acquiring AI company OfferFit [Q1 2026 Financial Highlights](index=1&type=section&id=Q1%202026%20Financial%20Highlights) In Q1 FY2026, revenue reached $162.1 million, a 19.6% increase YoY, demonstrating improved profitability with non-GAAP operating income of $2.8 million and nearly doubled free cash flow, despite a decline in dollar-based net retention Q1 FY2026 Key Financial Metrics (vs. Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | $162.1 million | $135.5 million | +19.6% | | Subscription Revenue | $154.9 million | $130.1 million | +19.1% | | **GAAP Gross Margin** | 68.6% | 67.1% | +1.5 p.p. | | **Non-GAAP Gross Margin** | 69.3% | 67.9% | +1.4 p.p. | | **GAAP Operating Loss** | $(40.2) million | $(40.1) million | - | | **Non-GAAP Operating Income/(Loss)** | $2.8 million | $(10.0) million | Improved | | **GAAP Net Loss per Share** | $(0.34) | $(0.35) | Improved | | **Non-GAAP Net Income/(Loss) per Share** | $0.07 | $(0.05) | Improved | | **Free Cash Flow** | $22.9 million | $11.4 million | +100.9% | Q1 FY2026 Key Customer Metrics (as of April 30) | Metric | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Customers** | 2,342 | 2,102 | +11.4% | | Customers with ARR ≥ $500k | 262 | 212 | +23.6% | | **Dollar-Based Net Retention** | 109% | 117% | -8 p.p. | | Dollar-Based Net Retention (ARR ≥ $500k) | 112% | 119% | -7 p.p. | - Remaining performance obligations (RPO) as of April 30, 2025, were **$829.3 million**, with **$522.2 million** expected to be recognized as revenue within one year[2](index=2&type=chunk) [Recent Business Highlights](index=2&type=section&id=Recent%20Business%20Highlights) The company strengthened its strategic position by acquiring OfferFit, an AI decisioning engine, to enhance its product offerings, expanded its platform with new messaging channels, and bolstered its leadership team - Hired seasoned SaaS leader Ed McDonnell as Chief Revenue Officer, effective early July, to lead global revenue operations[1](index=1&type=chunk)[7](index=7&type=chunk) - Completed the acquisition of OfferFit, an AI Decisioning Engine, to enhance customer relationship transformation and business value[1](index=1&type=chunk)[7](index=7&type=chunk) - Notable new business wins in the quarter included Beyond, Inc., Fubo, LUSH Cosmetics, and ThredUp[7](index=7&type=chunk) - Introduced two new dynamic messaging channels, RCS and Banners, to create more immersive customer journeys[7](index=7&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) Braze initiated guidance for Q2 FY2026, projecting revenue of $171.0 million - $172.0 million and non-GAAP operating income of $0.5 million - $1.5 million, while updating its full-year FY2026 guidance to forecast revenue between $702.0 million - $706.0 million and non-GAAP net income per share of $0.15 - $0.18 Fiscal Year 2026 Guidance | Metric (in millions, except per share) | Q2 2026 Guidance | Full Year 2026 Guidance | | :--- | :--- | :--- | | **Revenue** | $171.0 - $172.0 | $702.0 - $706.0 | | **Non-GAAP operating income** | $0.5 - $1.5 | $5.5 - $9.5 | | **Non-GAAP net income** | $2.5 - $3.5 | $17.0 - $21.0 | | **Non-GAAP net income per share, diluted** | $0.02 - $0.03 | $0.15 - $0.18 | | Weighted average shares, diluted | approximately 113.0 | approximately 115.0 | - Braze has not reconciled its non-GAAP guidance to the most comparable GAAP measures due to the uncertainty and potential variability of items like stock-based compensation expense[5](index=5&type=chunk) [Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section provides the unaudited condensed consolidated financial statements for the three months ended April 30, 2025, including the Statement of Operations, Balance Sheet, and Statement of Cash Flows, offering a detailed view of the company's financial performance and position [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the quarter ended April 30, 2025, Braze's revenue increased to $162.1 million from $135.5 million in the prior year, with gross profit growing to $111.2 million, and GAAP net loss per share improving slightly to $0.34 despite higher operating expenses Statement of Operations Highlights (in thousands) | Account | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | | :--- | :--- | :--- | | Revenue | $162,059 | $135,459 | | Gross Profit | $111,202 | $90,911 | | Total operating expenses | $151,424 | $130,991 | | Loss from operations | $(40,222) | $(40,080) | | Net loss attributable to Braze, Inc. | $(35,786) | $(35,641) | | Net loss per share, basic and diluted | $(0.34) | $(0.35) | - Total stock-based compensation expense for the quarter was **$30.4 million**, up from **$28.3 million** in the prior-year period[26](index=26&type=chunk) - General and administrative expenses included a one-time acquisition-related expense of **$10.0 million** in the quarter ended April 30, 2025[26](index=26&type=chunk) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of April 30, 2025, Braze reported total assets of $889.1 million, a slight increase from $871.0 million, maintaining a strong liquidity position with cash, cash equivalents, and marketable securities totaling $539.3 million, while total liabilities stood at $414.7 million Balance Sheet Highlights (in thousands) | Account | April 30, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $231,499 | $83,062 | | Marketable securities | $307,795 | $430,457 | | **Total Assets** | **$889,134** | **$870,998** | | Deferred revenue | $265,015 | $239,976 | | **Total Liabilities** | **$414,675** | **$396,249** | | **Total Stockholders' Equity** | **$474,426** | **$474,861** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 FY2026, Braze generated $24.1 million in cash from operating activities, with non-GAAP free cash flow significantly increasing to $22.9 million, and the company's cash and cash equivalents balance substantially rising to $232.0 million Statement of Cash Flows Highlights (in thousands) | Account | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $24,144 | $19,395 | | Net cash provided by/(used in) investing activities | $122,837 | $(10,604) | | Net cash provided by/(used in) financing activities | $605 | $(1,881) | | **Net change in cash, cash equivalents, and restricted cash** | **$148,437** | **$6,573** | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section details the adjustments made to reconcile GAAP results to non-GAAP measures, with significant items like stock-based compensation and acquisition-related expenses converting a GAAP operating loss of $40.2 million into a non-GAAP operating income of $2.8 million - Non-GAAP financial measures exclude expenses such as stock-based compensation, employer taxes on stock-based compensation, charitable contributions, acquisition-related expenses, and amortization of intangible assets[9](index=9&type=chunk) Reconciliation of GAAP Operating Loss to Non-GAAP Operating Income (in thousands) | Description | Three Months Ended April 30, 2025 | | :--- | :--- | | **Loss from operations (GAAP)** | **$(40,222)** | | Stock-based compensation expense | $30,399 | | Acquisition related expense | $10,020 | | Employer taxes related to stock-based compensation | $1,430 | | 1% Pledge charitable contribution expense | $1,109 | | Amortization of intangibles expense | $101 | | **Non-GAAP income from operations** | **$2,837** | Reconciliation of GAAP Operating Cash Flow to Non-GAAP Free Cash Flow (in thousands) | Description | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities (GAAP)** | **$24,144** | **$19,395** | | Purchases of property and equipment | $(217) | $(6,915) | | Capitalized internal-use software costs | $(1,055) | $(1,039) | | **Non-GAAP free cash flow** | **$22,872** | **$11,441** | [Other Information](index=3&type=section&id=Other%20Information) This section provides definitions for key business metrics used by the company, such as Annual Recurring Revenue (ARR) and Dollar-Based Net Retention Rate, and includes the standard forward-looking statements disclaimer regarding potential risks and uncertainties [Definition of Other Business Metrics](index=3&type=section&id=Definition%20of%20Other%20Business%20Metrics) Braze defines its key non-financial metrics to provide clarity, including 'customer' as the ultimate parent-level entity with an active subscription, 'Annual Recurring Revenue (ARR)' as the annualized value of current subscription contracts, and 'Dollar-Based Net Retention Rate' measuring ARR changes within a customer cohort over 12 months - A customer is defined as the separate and distinct, ultimate parent-level entity with an active subscription[13](index=13&type=chunk) - Annual Recurring Revenue (ARR) is the annualized value of customer subscription contracts as of the measurement date, assuming contracts are renewed on existing terms[14](index=14&type=chunk) - Dollar-Based Net Retention Rate is calculated by comparing the ARR from the same cohort of customers at the beginning and end of a 12-month period, reflecting expansion, contraction, and attrition[16](index=16&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements concerning the financial outlook for fiscal 2026 and the expected benefits from the OfferFit acquisition, which are subject to significant risks and uncertainties that could cause actual results to differ materially - Forward-looking statements in the report pertain to the financial outlook for Q2 and the full fiscal year 2026, and the anticipated benefits of the OfferFit acquisition[18](index=18&type=chunk) - These statements are subject to substantial risks, including unstable market conditions, failure to achieve financial targets, history of operating losses, and competition[19](index=19&type=chunk)

Financial Performance - Braze's quarterly revenue run rate is $648 million [3] - Braze experienced a year-over-year revenue growth of 19.6% in Q1'26 [4, 14] - Subscription revenue accounted for 96% of the total revenue [4] - GAAP net loss was $36 million [4] - Q1'26 non-GAAP gross margin was 69.3% [17] - Free cash flow for Q1'26 was $22.9 million [11, 25] Customer Metrics - Braze has 2,342 customers across over 75 countries [4] - Dollar-based net retention rate was 109% [4, 19] - Year-over-year customer growth was 11% [23] - Year-over-year growth of customers with over $500K ARR was 24% [23] Future Outlook (Guidance) - Braze projects Q2'26 revenue between $171 million and $172 million [30] - Braze anticipates full fiscal year 2026 revenue between $702 million and $706 million [30]

Core Viewpoint - Braze, Inc. (BRZE) shows significant potential for upside, with a mean price target of $50.16 indicating a 44.4% increase from its current trading price of $34.73 [1] Price Targets and Estimates - The mean estimate consists of 19 short-term price targets with a standard deviation of $9.15, suggesting variability in analyst predictions. The lowest estimate of $38 indicates a 9.4% increase, while the highest target of $75 suggests a potential surge of 116% [2] - A low standard deviation among price targets indicates strong agreement among analysts regarding the stock's price movement, which can serve as a starting point for further research [9] Analyst Sentiment and Earnings Estimates - Analysts have shown increasing optimism about BRZE's earnings prospects, as evidenced by a strong consensus in revising EPS estimates higher, which correlates with potential stock price increases [11] - Over the past 30 days, one estimate has increased, leading to a 0.7% rise in the Zacks Consensus Estimate for the current year [12] Zacks Rank and Investment Potential - BRZE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside in the near term [13]

Group 1 - Shares of Braze, Inc. (BRZE) have increased by 10.8% over the past four weeks, closing at $33.66, with a mean price target of $51.37 indicating a potential upside of 52.6% [1] - The mean estimate consists of 19 short-term price targets with a standard deviation of $10.18, where the lowest estimate is $38 (12.9% increase) and the highest is $75 (122.8% increase) [2] - Analysts show strong agreement in revising earnings estimates higher, which correlates with potential stock price movements [11][12] Group 2 - The Zacks Consensus Estimate for the current year has risen by 0.7% over the past month, with two estimates increasing and one decreasing [12] - BRZE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While the consensus price target may not be a reliable indicator of the stock's potential gain, it suggests a positive direction for price movement [13]

Group 1 - The current market focus is on the depth of the recession and the timeline for stocks to return to growth mode [1] - Recent fluctuations in stock prices have been influenced by a series of tariffs and reprieves [1] - Gary Alexander has extensive experience in technology sectors, both on Wall Street and in Silicon Valley, which informs his insights into current industry trends [1]

Core Insights - Braze Inc. is a marketing and customer data management firm that provides tools for companies to effectively engage with customers through data analysis and management [1][2] - The company has received significant attention from analysts, with 20 out of 21 firms rating its stock as a Buy and a consensus price target of $53, representing a potential upside of over 48% from current levels [2] Group 1: Acquisition and Integration - Braze announced the acquisition of AI-decisioning company OfferFit for $325 million, aimed at enhancing its data analysis capabilities and improving customer messaging relevance [3][4] - The acquisition is expected to modestly dilute operating income margins in the short term, but the long-term benefits are anticipated to outweigh the costs, particularly in enhancing ROI for customers [4] Group 2: Financial Performance - In the final quarter of fiscal 2025, Braze reported a 22% year-over-year revenue increase and achieved net income profitability for the third consecutive quarter, generating approximately $15 million in free cash flow [5][6] - The earnings per share (EPS) of 12 cents exceeded analyst expectations of 5 cents, leading to increased optimism among analysts and subsequent price target adjustments for BRZE shares [5][6] Group 3: Future Outlook - Braze's CEO highlighted a promising outlook with a projected 17% year-over-year revenue growth, even excluding the impact of the OfferFit acquisition, and a 12% increase in total customers [7][8] - The company is diversifying its customer base geographically and across industries, with expectations of positive operating income and net income in the upcoming period [8] Group 4: Market Position and Valuation - Despite a year-to-date decline of over 16% in share price, Braze's price-to-sales ratio stands at 6.3, which may present a compelling investment opportunity for potential investors [9] - Analysts suggest that even with the current dip in share price, there is potential for capital appreciation as shares may reach estimated price points in the future [9]

Core Viewpoint - Braze, Inc. (BRZE) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Revisions - The Zacks Consensus Estimate for Braze for the fiscal year ending January 2026 is projected at $0.33 per share, reflecting a 94.1% increase from the previous year's reported figure [8]. - Over the past three months, analysts have raised their earnings estimates for Braze by 7.6% [8]. Impact of Institutional Investors - Changes in earnings estimates are strongly correlated with near-term stock price movements, largely due to institutional investors who adjust their valuations based on these estimates [4]. - An increase in earnings estimates typically leads to higher fair value calculations for stocks, prompting institutional investors to buy or sell, which in turn affects stock prices [4]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Braze to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

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].