Braze Reports Strong Q2 Results, Raises Outlook as AI Integration Drives Growth

Why Is Braze Stock Surging Friday? - Braze (NASDAQ:BRZE)

Braze Inc. BRZE shares continued to surge in premarket trading on Friday after the company reported fiscal second-quarter 2026 revenue of $180.1 million, up 23.8% from $145.5 million a year earlier, beating the $170.1 million analyst estimate. Subscription revenue reached $171.8 million, while professional services and other revenue totaled $8.3 million. The remaining performance obligations were $862.2 million, with $558.2 million currently. The company posted a GAAP net loss of $27.9 million, or 26 cents per share, compared with a loss of $23.0 million, or 23 cents per share, in the year-ago quarter. Also Read: JPMorgan Trims Braze EPS Outlook As Investors React To Acquisition Growing Pains Non-GAAP net income was $16.9 million, or 15 cents per diluted share, beating the 3-cent estimate and up from $9.1 million, or 9 cents per diluted share, a year earlier. GAAP operating loss widened to $38.8 million, largely reflecting $39.5 million in stock-based compensation expense, while non-GAAP operating income rose to $6.0 million from $4.2 million. Non-GAAP gross margin slipped to 69.3% from 70.9%. Dollar-based net retention declined to 108% from 114% for all customers, and to 111% from 117% for customers with annual recurring revenue of $500,000 or more. Total customers increased to 2,422 from 2,163 a year ago, including 282 with ARR above $500,000 compared with 222 a year earlier. Operating cash flow was $7.0 million, down from $11.6 million, and free cash flow was $3.5 million versus $7.2 million. The company ended the quarter with $368.3 million in cash, cash equivalents, restricted cash, and marketable securities. Recent wins and expansions included DocMorris, Fogo de Chão, Gopuff, Kleinanzeigen, Laundryheap, Little Caesars, Metcash, Saily, Sweetgreen, and Wix. Braze also launched the Model Context Protocol Server to connect large language models with Braze data and published its 2025 ESG Report. Outlook For the fiscal third quarter, Braze expects revenue of $183.5 million to $184.5 million, above the $178.6 million estimate, and non-GAAP net income of $6.5 million to $7.5 million, or 6 cents to 7 cents per diluted share, above the 2-cent estimate. For the full year ending January 31, 2026, the company raised its outlook, now projecting revenue of $717.0 million to $720.0 million, above the $697.7 million estimate, and non-GAAP net income of $45.5 million to $46.5 million, or 41 cents to 42 cents per diluted share, compared with prior guidance of 15 cents to 18 cents and ahead of the 17 cents estimate. "Looking ahead, Braze is focused on AI solutions that will empower brands to transform the customer engagement experience for marketers and end users alike, driving high ROI for our customers and Braze," commented cofounder and CEO Bill Magnuson. Following the results, Piper Sandler analyst Brent Bracelin maintained an Overweight rating on Braze and raised the price forecast from $38 to $50. Price Action: At last check Friday, BRZE shares were trading higher by 21.11% to $33.50 premarket. Read Next: Pony AI Expands In Middle East With Qatar Robotaxi Partnership Photo by T. Schneider via Shutterstock BRZEBraze Inc$33.4921.1%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum9.91GrowthN/AQualityN/AValue54.86Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Braze Revenue Jumps 24% in Fiscal Q2

Braze (BRZE 2.56%), a leader in customer engagement software, released its results for Q2 FY2026 on September 4, 2025. The company reported GAAP revenue of $180.1 million, surpassing both its own financial guidance of $171.0-$172.0 million and consensus analyst estimates, with non-GAAP earnings per share also outperformed expectations. Revenue grew to $180.1 million, a 23.8% increase from the prior year, outpacing management's guidance of $171.0-$172.0 million. Non-GAAP EPS reached $0.15, compared to management's non-GAAP forecast of $0.02-$0.03. These results marked a notable outperformance. Management raised its full-year outlook for both revenue and non-GAAP earnings following strong subscription growth and new customer wins, though some key retention and margin metrics showed signs of pressure. Overall, the quarter reflected continued top-line momentum alongside emerging operating challenges. Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2026 earnings report. About Braze and Business Focus Braze provides a cloud-based software platform designed to help brands manage customer engagement across digital channels like email, push notifications, in-app messaging, and SMS. The company powers tailored marketing experiences for hundreds of brands globally, serving as a critical technology partner for both digital-first and traditional enterprises. The company has focused recent strategy around broadening its artificial intelligence (AI) and machine learning capabilities, accelerating real-time data processing, and enabling brands to reach customers with cross-channel communications. Success in these areas depends on platform scalability, rapid integration of new AI-driven tools, customer expansion, and maintaining strong retention rates among large enterprise clients. Quarterly Highlights and Performance Drivers The quarter saw revenue climb 23.8 % year over year, significantly outpacing management's outlook and consensus analyst forecasts on a non-GAAP basis. Subscription revenue rose 22.8% year-over-year, reaching $171.8 million, while professional services and other revenue jumped 50.9% year-over-year. New customer signings and upselling existing accounts drove this growth. Total customers reached 2,422, a 12.0% increase year-over-year, and customers with annual recurring revenue above $500,000 expanded 27% year-over-year to 282. Non-GAAP operating income reached $6.0 million, much higher than management's non-GAAP guidance of $0.5-$1.5 million, and reflected a margin of 3.4 %. Non-GAAP earnings per share finished five times above the top of management's outlook at $0.15. These beats came even as non-GAAP gross margin declined to 69.3%. On a GAAP basis, the operating loss widened due to elevated stock-based compensation, totaling $39.5 million. The company reported non-GAAP free cash flow of $3.5 million, down from the $7.2 million achieved in the prior year and trailing the $23 million result from the prior quarter. Cash, equivalents, and marketable securities stood at $368.3 million as of July 31, 2025, notably lower from earlier in the year due to the $181.2 million paid for OfferFit. Braze's dollar-based net retention rate, a key metric indicating additional revenue growth from existing customers, slipped to 108 %, down from 114 % the year prior. Among large enterprise customers with recurring contracts above $500,000, dollar-based net retention was 111%. Dollar-based net retention for all customers declined to 108% from 114% year-over-year, and for customers with annual recurring revenue of $500,000 or more declined to 111% from 117% year-over-year, which management attributed in part to renewal timing. Meanwhile, remaining performance obligations -- a measure of contracted business yet to be recognized as revenue -- rose to $862.2 million, indicating strong future demand. Product and Strategic Developments During the quarter, the company advanced its AI-powered customer engagement platform. Notably, it launched the Model Context Protocol (MCP) Server, a product designed to connect large language models (LLMs) with Braze's data for more advanced real-time engagement. OfferFit is part of Braze's expanding AI product family and aims to enhance targeting and automation for marketing campaigns. Management described these innovations as strengthening Braze's market position against traditional marketing software competitors. The customer list added breadth, as new wins included brands like DocMorris, Fogo de Chão, Gopuff, Kleinanzeigen, Laundryheap, Little Caesars, Metcash, Saily, Sweetgreen, and Wix. These additions demonstrate continued global reach and cross-industry appeal. Remaining performance obligations -- a forward-looking pipeline metric -- continued to grow, supporting projections for sustained demand and business expansion in upcoming periods. Braze underscored its core focus areas: real-time data processing for customer engagement, cross-channel outreach spanning email, mobile, and web, robust machine learning capabilities for automation and personalization, and technology integration across business systems. The ability to scale was demonstrated by the customer gains and growing enterprise account base. Outlook and Guidance Management raised its financial outlook for both the next quarter and the full fiscal year on a non-GAAP basis. For the third quarter, revenue is projected to be $183.5-$184.5 million, with non-GAAP EPS targeted at $0.06-$0.07. Non-GAAP net income is expected between $6.5 million and $7.5 million. For the full fiscal year ending January 31, 2026, management now forecasts revenue of $717.0-$720.0 million, non-GAAP operating income of $24.5-$25.5 million, and non-GAAP earnings per share of $0.41-$0.42 -- substantial increases over the prior guidance following recent outperformance and the assimilation of OfferFit into core operations. Looking forward, the cash balance remains robust, but dilution from ongoing stock-based compensation is something to monitor. With new wins and an expanding product suite, Braze remains focused on scaling its global platform. Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Braze Revenue Jumps 24 Percent in Q2

Braze (BRZE 2.56%) reported fiscal 2Q2026 results on September 4, 2025, with revenue of $180 million, up 24% year-over-year, and non-GAAP operating income of $6 million. The company's customer count rose to 2,422, including early contributions from OfferFit, and raised its full-year FY2026 guidance for both revenue and non-GAAP operating profit while emphasizing strong execution, improved sales productivity, and progress in AI-led product development and integration. Annual recurring revenue tops $700 million as Braze expands large customer base Annual recurring revenue (ARR) surpassed $700 million, supported by a 27% year-over-year increase in customers with $500,000-plus ARR to 282, which now represent 62% of total ARR. The company's total customer count grew by 12% year-over-year, aided by both organic wins and the addition of OfferFit's customer portfolio. "I'm also pleased to announce that we recently passed $700 million of committed annual recurring revenue, demonstrating continued strong demand for the ROI delivered by the Braze customer engagement platform. Thank you to our dedicated team across the world who helped us achieve this milestone." -- William Magnuson, Chief Executive Officer The sustained expansion of high-value enterprise customers not only boosts revenue stability but also enhances Braze's multi-year contract visibility. Braze drives operational leverage with OfferFit integration and sales execution Excluding a $2.8 million OfferFit contribution, organic revenue grew 22% year-over-year, while OfferFit added 17 net new customers and two net new large clients, validating early cross-sell initiatives. Non-GAAP sales and marketing efficiency improved to 39% of revenue (down 1 percentage point year-over-year) despite absorbing new integration-related costs. "The OfferFit integration is performing extremely well. We've onboarded Ed McDonnell, which is going very, very well. And so we know these were some sources of some uncertainty over the last few months. That's now behind us. And we're really pleased with our plan for capital deployment through the back of the year. And so when you combine that visibility and transparency with some of the upside that we're seeing on the revenue piece, that's how you come up with the improved profitability, and we're excited to be on that path." -- Isabelle Winkles, Chief Financial Officer The successful and rapid consolidation of OfferFit is reducing execution risk. AI investments drive Braze product leadership and customer retention Braze emphasized rapid adoption of AI-powered features across verticals, highlighting proprietary technologies spanning recommendation engines, reinforcement learning, and generative AI. AI is also reducing barriers for new customers and unlocking broader usability of legacy capabilities, with management noting the closing of previous customer apprehension gaps. "can make full use of Braze. And I think our AI road map has tremendous promise to close that gap, both by lowering the barriers to entry for those more sophisticated features as well as decreasing the manual effort required to test and deploy both new use cases and run ongoing experiments. And so I think we've been really happy primarily with continuing to see that gap being closed where the differentiation that Braze has always been able to deliver due to our power and our flexibility is becoming more accessible to more of our customer base. And that's giving us both stronger differentiation in sales cycles, but also stronger usage and ongoing value creation for our customers, not just from the AI features, but from the existing differentiation that we already had, but that was maybe not as accessible or as usable and AI is helping really close that gap." -- William Magnuson, Chief Executive Officer The velocity of AI-driven product advancements fortifies Braze's competitive moat, deepens customer entrenchment, and positions the company to capture incremental share as enterprises seek out vendors capable of delivering actionable, real-time personalization at scale. Looking Ahead For Q3 FY2026, Braze projects revenue of $183.5 million to $184.5 million (up approximately 21% year-over-year at midpoint) and non-GAAP operating income of $3.5 million to $4.5 million, reflecting the impact of event-related expenses. For full-year FY2026, guidance calls for $717 million to $720 million in revenue (21% year-over-year growth at the midpoint), non-GAAP operating income of $24.5 million to $25.5 million, and non-GAAP net income of $45.5 million to $46.5 million. Management reaffirmed that OfferFit will contribute approximately two percentage points to top-line growth in FY2026 and highlighted the upcoming Forge conference for the unveiling of further AI innovations and partner initiatives.