Braze(US:BRZE)2025-12-09 22:32Financial 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]