0001676238-25-000134
SEC filingRevenue grew 23.8% YoY to $180.1M, driven by subscription growth, while gross margin contracted 250 bps to 67.7%.
For the three months ended July 31, 2025, Braze reported revenue of $180.1 million, a 23.8% increase from $145.5 million in the prior-year period. Subscription revenue rose 22.7% to approximately $172.0 million, with 41.2% of the increase attributable to existing customer expansion (higher monthly active users, channel expansion, and committed entitlements) and 58.8% from new customers. Professional services revenue surged 50.6% to $8.1 million, driven by deliverability and technical account management services. International revenue grew by $16.1 million as the company expanded in Europe and Asia-Pacific.
Gross profit increased 19.4% to $121.9 million, but gross margin contracted 250 basis points to 67.7% from 70.2%. The decline was primarily due to acquisition-related costs from OfferFit, including amortization of acquired technology ($1.6 million) and higher personnel costs, as well as increased tech stack expenses. Operating loss widened to $38.8 million from $28.0 million, with operating margin deteriorating to -21.5% from -19.2%. Net loss increased to $27.8 million from $23.1 million.
Braze operates two revenue segments: Subscription and Professional Services. Subscription revenue, which constitutes the vast majority of total revenue, grew 22.7% YoY, driven by both existing customer expansion (41.2% of growth) and new customer acquisition (58.8%). The company ended the period with 2,422 customers, up from 2,163 a year earlier. Dollar-based net retention rate declined to 108% from 114%, reflecting customer renewals at lower levels amid macroeconomic uncertainty. Customers with ARR of $500,000 or more increased to 282 from 222, indicating continued upmarket traction. Professional Services revenue grew 50.6%, reflecting higher demand for premium services such as email deliverability and technical account management.
Management did not provide explicit forward guidance in this MD&A section. However, the company highlighted its land-and-expand business model, with expectations to continue investing in sales and marketing to drive customer acquisition and expansion. International expansion remains a priority, with 45% of revenue generated outside the U.S. in both periods. The company expects research and development expenses to increase in absolute dollars as it invests in platform enhancements, including AI capabilities. Macroeconomic conditions, including inflationary pressure and interest rate increases, are noted as headwinds that may impact customer renewal levels. Braze believes its current cash, cash equivalents, and marketable securities of $368.3 million are sufficient to meet working capital and capital expenditure requirements for at least the next 12 months.
As of July 31, 2025, Braze held $81.0 million in cash and cash equivalents and $282.6 million in marketable securities, providing a strong liquidity position of $363.6 million. The company has no outstanding debt, with total stockholders' equity of $598.9 million. Goodwill surged to $267.8 million due to the OfferFit acquisition on June 2, 2025, which also added $66.6 million in intangible assets (developed technology, customer relationships, trademarks). Operating lease liabilities totaled $84.4 million (discounted), with $20.0 million current.
Remaining performance obligations (RPO) were $862.2 million, with $558.2 million expected within one year. Deferred revenue stood at $262.1 million. Operating lease commitments are $108.7 million undiscounted, with $9.9 million due in the remainder of fiscal 2026. Indirect tax contingencies of $3.8 million are accrued. No material purchase commitments (e.g., supply agreements) were disclosed.
No share repurchase programs or dividends were authorized or paid. Capital expenditures, including capitalized internal-use software, totaled $4.7 million (1.4% of revenue) for the six-month period. Stock-based compensation was $70.0 million, with $1.1 million capitalized. The OfferFit acquisition consumed $195.3 million in cash and $108.7 million in stock. No debt issuance or repayment occurred.
The company operates as a single reportable segment: customer engagement platform. Revenue for the six months ended July 31, 2025 was $342.2 million, split 55% U.S. ($186.6M) and 45% international ($155.6M). No single customer exceeded 10% of revenue. The CODM evaluates performance using consolidated net loss, which was $(63.7) million attributable to Braze.
Net loss of $63.4 million was significantly offset by non-cash charges including stock-based compensation ($68.2M) and amortization of deferred contract costs ($19.5M), resulting in positive operating cash flow of $31.1 million. This is consistent with the prior period ($31.0M) despite a higher net loss. Capex ($4.7M) represents a moderate 15% of CFO, indicating low capital intensity. The major investing activity was the acquisition cash outflow of $181.2M, partially funded by $102.5M in maturities and $120.8M in returns of principal on marketable securities. Working capital changes were favorable, with $11.5M from accounts receivable and $14.5M from deferred revenue, partially offset by $24.8M in deferred contract costs. No share repurchases or dividends were paid. Overall, cash flows reflect solid operational cash generation despite GAAP losses, with heavy investment in acquisition and securities.