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Braze, Inc. (BRZE)·Q1 2026 Earnings Summary

Executive Summary

  • Revenue of $162.1M grew 19.6% YoY and modestly sequentially; non-GAAP EPS of $0.07 and non-GAAP operating income of $2.8M marked the fourth consecutive quarter of non-GAAP profitability . Versus consensus, BRZE delivered a revenue beat of ~$3.5M and an EPS beat of ~$0.02, continuing estimate-beat momentum from Q4 *.
  • Guidance raised for FY26 revenue to $702–$706M (from $686–$691M), incorporating the OfferFit acquisition; Q2 guide set at $171–$172M revenue with non-GAAP EPS of $0.02–$0.03 .
  • Strategic catalysts: completed acquisition of OfferFit to deepen reinforcement learning across the platform, and strengthened go-to-market with the hiring of a seasoned CRO (Ed McDonnell) effective early July .
  • KPIs mixed: RPO/CRPO up strongly (RPO $829.3M; CRPO $522.2M), but dollar-based net retention moderated to 109% from 111% in Q4 and 113% in Q3 amid elevated churn; management expects churn to improve through FY26 .

What Went Well and What Went Wrong

  • What Went Well

    • Sustained non-GAAP profitability and FCF: non-GAAP net income $7.3M, non-GAAP EPS $0.07; free cash flow $22.9M, reflecting efficiency improvements and disciplined investment .
    • Strong bookings and RPO build: RPO rose to $829.3M (+26% YoY; +5% QoQ), CRPO $522.2M, supported by renewals and upsells; customer count increased to 2,342 with large customers (≥$500k ARR) at 262 .
    • Strategic AI expansion: closed OfferFit acquisition and advanced Braze AI roadmap (RCS, Banners, Canvas enhancements); CEO emphasized integrated reinforcement learning to raise deal sizes and differentiate versus legacy competitors .
    • Quote: “We delivered strong revenue growth, profitability, and free cash flow… and look forward to achieving sustained profitable growth” — Bill Magnuson, CEO .

  • What Went Wrong

    • Net retention deceleration: DBNR for all customers fell to 109% (from 111% in Q4 and 113% in Q3); large-customer DBNR declined to 112% (from 114% in Q4 and 116% in Q3), reflecting renewal seasonality and elevated churn cohorts .
    • GAAP losses persisted: GAAP operating loss of $40.2M (SBC $30.4M primary contributor); GAAP net loss per share of $(0.34), despite non-GAAP profitability .
    • Uneven macro/regional softness: management cited noise in the macro and comparative weakness in parts of APAC (Southeast Asia) affecting demand; cautioned against using CRPO as a leading indicator .

Financial Results

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$152.052 $160.400 $162.059
GAAP Gross Margin (%)69.8% 69.3% 68.6%
Non-GAAP Gross Margin (%)70.5% 69.9% 69.3%
GAAP Operating Margin (%)(21.4)% (13.4)% (24.8)%
Non-GAAP Operating Margin (%)(1.4)% 5.0% 1.8%
GAAP EPS ($)$(0.27) $(0.17) $(0.34)
Non-GAAP EPS, Diluted ($)$0.02 $0.12 $0.07
Segment Revenue ($USD Millions)Q3 2025Q4 2025Q1 2026
Subscription$146.3 $153.9 $154.9
Professional Services & Other$5.8 $6.5 $7.2
KPIsQ3 2025Q4 2025Q1 2026
Customers (period-end)2,211 2,296 2,342
Large Customers (ARR ≥$500k)234 247 262
DBNR (All)113% 111% 109%
DBNR (≥$500k ARR)116% 114% 112%
RPO ($USD Millions)$716.8 $793.1 $829.3
CRPO ($USD Millions)$458.2 $505.2 $522.2
Actuals vs S&P Global ConsensusQ4 2025Q1 2026
Revenue: Actual vs Consensus ($M)$160.4 vs $155.7* $162.1 vs $158.6*
Non-GAAP EPS: Actual vs Consensus ($)$0.12 vs $0.054* $0.07 vs $0.046*

Values marked with * retrieved from S&P Global.

Non-GAAP adjustments: Q1 non-GAAP metrics exclude SBC ($30.4M), employer payroll taxes ($1.43M), charitable donation ($1.11M), acquisition-related expenses ($10.02M), amortization of intangibles ($0.10M), and contingent consideration adjustments (none), per reconciliations .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY26$686.0 – $691.0 $702.0 – $706.0 Raised (includes OfferFit)
Non-GAAP Operating Income ($M)FY26$25.5 – $29.5 $5.5 – $9.5 Lowered (OfferFit integration dilutive)
Non-GAAP Net Income ($M)FY26$34.0 – $38.0 $17.0 – $21.0 Lowered
Non-GAAP EPS, Diluted ($)FY26$0.31 – $0.35 $0.15 – $0.18 Lowered
Diluted Shares (M)FY26~110.0 ~115.0 Raised
Revenue ($M)Q2 FY26N/A$171.0 – $172.0 Initiated
Non-GAAP Operating Income ($M)Q2 FY26N/A$0.5 – $1.5 Initiated
Non-GAAP Net Income ($M)Q2 FY26N/A$2.5 – $3.5 Initiated
Non-GAAP EPS, Diluted ($)Q2 FY26N/A$0.02 – $0.03 Initiated
Diluted Shares (M)Q2 FY26N/A~113.0 Initiated

Notes:

  • Q4 provided Q1/FY26 guidance excluding OfferFit; Q1 updated FY26 guidance includes 2 pts of revenue growth from OfferFit ($11–$12M) and more risk-adjustment, with margin dilution concentrated in OpEx per CFO commentary .
  • Company does not reconcile non-GAAP guidance to GAAP due to variability in SBC and related items .

Earnings Call Themes & Trends

TopicQ3 2025 (Previous Mentions)Q4 2025 (Previous Mentions)Q1 2026 (Current Period)Trend
AI/Technology InitiativesAnnounced Project Catalyst vision; expanded channels (LINE, RCS), Canvas/WhatsApp features; Forge customer conference Project Catalyst private beta targeted; definitive agreement to acquire OfferFit to deepen reinforcement learning Closed OfferFit; introduced RCS/Banners/Canvas context; integrating multi-agent decisioning; targeting higher deal sizes and platform differentiation Intensifying AI integration and commercialization
Macro/TariffsSteady execution in mixed environment; legacy cloud replacement cycle continues Longer enterprise cycles, higher stakeholder/RFP involvement; legacy vendors’ underinvestment improving BRZE win rates Macro remains noisy; CRPO not a leading indicator; improved sales execution; tariff uncertainty cited for retail/consumer goods Cautious; execution offsets macro noise
Regional TrendsGlobal diversification; added customers across geographies Strength in Americas/EMEA; expanding data center footprint (US/EU; AU coming) Strength in Americas/EMEA; relative APAC softness; recent data centers in Australia/Indonesia to address residency needs Building infrastructure; APAC uneven
Pricing/PackagingFlexible credits introduced across select channels Expanded flexible credits planned; simplification aids negotiations Massive relaxation of data point limits; expanded flexible credits; positive early customer reception Lower friction; supportive of expansion
Partner Ecosystem/SIsForge attendance; ecosystem engagement More RFPs; partners re-evaluating legacy commitments; improved ecosystem engagement Regional SI/agency momentum; strong partner events; OfferFit lead-rich environment via BRZE base Strengthening alliances
Regulatory/Legal & FXData residency concerns rising; expanding DCs Meta channel/pricing dynamics monitored; data sovereignty planning FX de minimis (JPY only, low single-digit % revenue); continued residency investments Managed exposure

Management Commentary

  • Prepared remarks: “We delivered $162.1 million of revenue, up nearly 20% year over year… fourth straight quarter of non-GAAP net income profitability, achieving over $7 million of net income and nearly $23 million of free cash flow” — Bill Magnuson .
  • Strategy: Integration of OfferFit’s reinforcement learning agents throughout Braze AI and Canvas to elevate personalization and ROI, with initial focus on increased deal sizes and differentiated AI capabilities .
  • Go-to-market: Appointment of Ed McDonnell as CRO (ex-Salesforce Marketing Cloud and Asana) to scale revenue operations and drive enterprise motion .
  • Financial discipline: Non-GAAP margins improved via tech stack cost optimization and personnel efficiencies; non-GAAP operating margin expanded >900bps YoY .

Q&A Highlights

  • Leading indicators: Management prefers revenue acceleration over CRPO as signal; renewal dollar volume can make CRPO noisy; expects churn to improve through year .
  • Project Catalyst performance: Early reinforcement learning use cases show significant uplift (example ~5x improvement by elevating decision-making level); Catalyst in private beta, longer-term automation to strategy-level decisions .
  • OfferFit pricing: Sold per use case at ~$250k–$300k annually including expert services; expected to be additive and value-sold into high-scale B2C enterprises .
  • Pricing changes: Relaxation of data point limits and broader flexible credits model reduce friction, accelerate negotiations, and support expansion and satisfaction .
  • Regional/macro: Strong in Americas/EMEA; APAC softness tied to uneven China recovery; FX impact de minimis (JPY only) .

Estimates Context

  • Q1 2026 actuals vs consensus: Revenue $162.1M vs $158.6M*; non-GAAP EPS $0.07 vs $0.046* — clear beat on both. Q4 2025 also beat: revenue $160.4M vs $155.7M*; non-GAAP EPS $0.12 vs $0.054* .
  • Implications: Consensus likely to adjust higher for FY26 topline (OfferFit contribution ~2 pts of growth) while recalibrating margin expectations lower due to integration costs and risk-adjustment comments from CFO .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • BRZE continues to beat Street revenue/EPS while sustaining non-GAAP profitability and FCF, supported by disciplined cost control and improving go-to-market efficiency .
  • Guidance raised for FY26 revenue (now $702–$706M) on OfferFit inclusion and Q1 beat passthrough; near-term non-GAAP margins will be diluted by integration, with return to framework expected in FY27 .
  • OfferFit is a strategic catalyst: near-term larger deal sizes and differentiation; medium-term reinforcement learning infused across Braze AI and Canvas; supports upsell/cross-sell at enterprise scale .
  • KPIs show healthy pipeline (RPO/CRPO up), though DBNR moderation reflects renewal seasonality and prior churn cohorts; management expects churn improvement through FY26 .
  • Pricing/packaging changes (data point limit relaxation, flexible credits) reduce sales friction, improve satisfaction, and enable channel experimentation—supportive for expansion and retention .
  • Regional positioning and data residency investments (new DCs in AU/ID) underpin growth in regulated industries and global accounts as sovereignty requirements tighten .
  • Trading setup: Near-term catalysts include OfferFit integration progress, Q2 print vs guide ($171–$172M), CRO onboarding, and AI product updates; watch DBNR trajectory and macro sensitivity in APAC/retail .