Summary of Braze FY Conference Call - September 10, 2025 Company Overview - **Company**: Braze (NasdaqGS:BRZE) - **Industry**: Customer Engagement and Marketing Technology Key Points Data Architecture and Competitive Advantage - Braze emphasizes the importance of data architecture as a competitive advantage in the AI era, focusing on real-time data processing rather than traditional data warehousing [7][12][11] - The company has built a stream processing engine similar to high-frequency trading systems, allowing for real-time updates and actions based on customer engagement data [8][9][10] - Braze processes over 10 trillion data points annually, highlighting its capability to handle massive data flows efficiently [29] Business Momentum and Growth Outlook - Braze has shown an improving growth outlook for margins and profits, with increased productivity in its sales force over the last two quarters [34][36] - The company has improved its renewal processes, leading to lower downsell risks and better customer retention [38][40] - The overall effectiveness of the sales team has increased, contributing to a positive forecast for future performance [41] Replacement Cycle and Market Position - Braze is four years post-IPO and is analyzing changes in enterprise replacement cycles, indicating a shift in customer engagement strategies [7] - The company is focusing on enhancing its international strategy and verticalization to improve efficiency [38] AI and Composable Intelligence - Braze is transitioning to a new framework of context, intelligence, and interaction, leveraging advancements in AI and machine learning [20][21] - The concept of "composable intelligence" is introduced, where models are imbued with brand knowledge and can operate autonomously, enhancing marketing strategies [24][23] - The integration of AI tools aims to improve marketer productivity and customer engagement by automating decision-making processes [22][28] OfferFit and Unit Economics - OfferFit, a new product line, has two SKU types priced between $100,000 and $300,000, targeting enterprises with high-leverage use cases [49][50] - The potential for cross-selling between OfferFit and Braze's existing customer base is significant, with many OfferFit customers not currently using Braze's customer engagement solutions [51] - The decisioning products have higher gross margin potential compared to traditional messaging services, positioning Braze favorably in the market [52] Future Outlook - Braze is excited about upcoming developments in AI-centric customer engagement and plans to share more at the Forge event [53] - The company is focused on enhancing its product portfolio and leveraging AI to drive customer engagement strategies [52][53] Additional Important Insights - The company has made significant investments in first-party data and real-time context understanding, which are crucial for effective customer engagement [29][30] - Braze continues to expand its channel offerings, including new functionalities for messaging platforms like WhatsApp and Kakao [30]

Financial Data and Key Metrics Changes - The company reported revenue of $180 million for Q2 2026, representing a 24% year-over-year increase and an 11% increase from the prior quarter [6][18] - Non-GAAP operating income was $6 million, with a non-GAAP net income of $17 million, and free cash flow of $4 million [6][24] - The company achieved three consecutive quarters of positive non-GAAP operating income and free cash flow, and five consecutive quarters of positive non-GAAP net income [7] 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 [18] - The total customer count increased by 12% year-over-year to 2,422, with large customers (spending at least $500,000 annually) growing by 27% year-over-year to 282 [18][19] - Dollar-based net retention was 108% overall and 111% for large customers, indicating strong expansion across industries and regions [20] Market Data and Key Metrics Changes - Revenue outside the U.S. contributed 45% of total revenue, down approximately 60 basis points sequentially but in line with the prior year [20] - The total remaining performance obligation was $862 million, up 25% year-over-year, with current RPO at $558 million, up 27% year-over-year [21] Company Strategy and Development Direction - The company aims to drive higher profitability while reinvesting in business growth and maintaining its competitive advantage in customer engagement [7][17] - The integration of OfferFit is expected to enhance the company's AI capabilities and customer engagement strategies, with a focus on autonomous personalization [12][13] - The company is committed to improving customer engagement through AI-driven innovations and enhancing the user experience [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the year, citing strong pipeline generation and competitive strength despite global trade and economic concerns [7][32] - The company noted that the demand environment remains stable, with improved execution and high competitive win rates contributing to positive performance [32][33] - Management highlighted the importance of AI in transforming customer engagement and enhancing marketer productivity [66] Other Important Information - The company expects Q3 2026 revenue to be in the range of $183.5 million to $184.5 million, representing a year-over-year growth rate of approximately 21% [26] - For the full fiscal year 2026, total revenue is expected to be in the range of $717 million to $720 million, with OfferFit contributing approximately two percentage points to year-over-year growth [28][29] Q&A Session Summary Question: What has changed in the demand environment and the appetite for Braze? - Management noted that there hasn't been a meaningful change in the macro or demand environment, but execution has improved globally, leading to high competitive win rates and efficient late-stage pipeline operations [32] Question: What are the expectations for OfferFit's integration and its impact on ACV? - Management reported strong early wins from OfferFit across all regions and expressed confidence in high attach rates for the offering, which is priced around $300,000 annually [41][45] Question: How is the usage of AI products trending? - Management indicated rapid adoption of AI features across various verticals, enhancing customer engagement and closing the gap between capability and accessibility for customers [52][53] Question: How has sales execution improved? - Management highlighted synchronization of operational changes and investments leading to improved sales efficiency and better prioritization of late-stage pipeline opportunities [56][57] Question: What changes have been observed in the demand environment across geographies? - Management noted strong performance globally, with contributions from all regions, particularly from the ANZ region due to investments like the new data center [80]