Braze(BRZE) - 2026 Q1 - Quarterly Results

Financial & Business Highlights 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 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] Recent Business Highlights 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][7] - Completed the acquisition of OfferFit, an AI Decisioning Engine, to enhance customer relationship transformation and business value[1][7] - Notable new business wins in the quarter included Beyond, Inc., Fubo, LUSH Cosmetics, and ThredUp[7] - Introduced two new dynamic messaging channels, RCS and Banners, to create more immersive customer journeys[7] Financial Outlook 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] Consolidated Financial Statements (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 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] - General and administrative expenses included a one-time acquisition-related expense of $10.0 million in the quarter ended April 30, 2025[26] Condensed Consolidated Balance Sheets 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 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 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] 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 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 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] - 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] - 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] Forward-Looking Statements 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] - These statements are subject to substantial risks, including unstable market conditions, failure to achieve financial targets, history of operating losses, and competition[19]