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Braze, Inc. (BRZE)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 revenue was $180.1M, up 23.8% y/y and +11% q/q; non-GAAP diluted EPS was $0.15. Consensus was ~$171.6M revenue and $0.03 EPS, implying a clear beat on both top line and EPS.*
  • FY26 guidance raised: revenue to $717–$720M (from $702–$706M in Q1), non-GAAP operating income to $24.5–$25.5M (from $5.5–$9.5M), and non-GAAP diluted EPS to $0.41–$0.42 (from $0.15–$0.18). Management also guided Q3 revenue to $183.5–$184.5M.
  • Bookings/visibility improved: RPO rose to $862.2M (+25% y/y) with CRPO at $558.2M (+27% y/y); DBNR stabilized sequentially in-period, though TTM DBNR declined y/y to 108% (all customers) and 111% (≥$500k ARR).
  • Operating leverage continued: non-GAAP operating income of $6.0M (3.4% margin) and non-GAAP gross margin of 69.3%; GAAP gross margin declined on higher premium messaging volume. Free cash flow was $3.5M; net cash from operations $7.0M.
  • Stock reaction catalysts: “beat and raise” quarter, OfferFit attach/pricing and AI roadmap momentum, CRPO acceleration, and DBNR stabilization commentary.

What Went Well and What Went Wrong

What Went Well

  • Strong beat on revenue and EPS with FY guide raised; RPO/CRPO growth accelerated. “We delivered great second quarter results… $180M of revenue, up 24% y/y and 11% q/q… [and] $6M non-GAAP operating income, $17M non-GAAP net income.”
  • AI product momentum and OfferFit integration: pipeline and early wins across Americas/EMEA/APAC; full OfferFit offering priced around ~$300k annually and on pace to contribute ~2 pts of y/y growth.
  • Sales execution improved and downsell attenuation: management cited historically high win rates, better late-stage pipeline efficiency, and improved in-period DBNR vs Q1.

What Went Wrong

  • GAAP gross margin compressed to 67.7% (from 70.2% y/y) on higher premium messaging volumes; non-GAAP gross margin also down y/y (69.3% vs 70.9%).
  • GAAP operating loss widened to $38.8M, with $39.5M stock-based comp a primary contributor; EBITDA outcome was below consensus (S&P), reflecting GAAP costs and acquisition amortization effects.*
  • Free cash flow and operating cash flow moderated q/q given acquisition-related cash impacts and timing of payments; management expects FCF to fluctuate.

Financial Results

Quarterly Performance vs Prior Periods and Estimates

MetricQ4 FY25Q1 FY26Q2 FY26
Revenue ($USD Millions)$160.4 $162.1 $180.1
Revenue Consensus ($USD Millions)——$171.6*
GAAP Gross Margin %69.3% 68.6% 67.7%
Non-GAAP Gross Margin %69.9% 69.3% 69.3%
Non-GAAP Operating Income ($USD Millions)$7.9 $2.8 $6.0
Non-GAAP Operating Margin %5.0% 1.8% 3.4%
GAAP EPS (basic & diluted)$(0.17) $(0.34) $(0.26)
Non-GAAP Diluted EPS$0.12 $0.07 $0.15
Primary EPS Consensus Mean ($USD)——$0.03*

Values with asterisk (*) retrieved from S&P Global.

Segment Revenue Mix

MetricQ4 FY25Q1 FY26Q2 FY26
Subscription Revenue ($USD Millions)$153.9 $154.9 $171.8
Professional Services & Other ($USD Millions)$6.5 $7.2 $8.3

KPIs and Cash Flow

MetricQ4 FY25Q1 FY26Q2 FY26
Total Customers2,296 2,342 2,422
≥$500k ARR Customers247 262 282
DBNR (All Customers, TTM)111% 109% 108%
DBNR (≥$500k ARR, TTM)114% 112% 111%
RPO ($USD Millions)$793.1 $829.3 $862.2
CRPO ($USD Millions)$505.2 $522.2 $558.2
Net Cash from Operations ($USD Millions)$17.1 $24.1 $7.0
Free Cash Flow ($USD Millions)$15.2 $22.9 $3.5

Q2 FY26 Actual vs Consensus Detail

MetricConsensusActualSurprise
Revenue ($USD Millions)$171.6*$180.1 +$8.5
Primary EPS ($USD)$0.03*$0.15 +$0.12
EBITDA ($USD Millions)$3.7*$(35.3) -$39.0

Values with asterisk (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 FY26—$183.5–$184.5 Initiated
Non-GAAP Operating Income ($USD Millions)Q3 FY26—$3.5–$4.5 Initiated
Non-GAAP Net Income ($USD Millions)Q3 FY26—$6.5–$7.5 Initiated
Non-GAAP Diluted EPSQ3 FY26—$0.06–$0.07 Initiated
Diluted Wtd Avg Shares (Millions)Q3 FY26—~113.5 Initiated
Revenue ($USD Millions)FY26$702–$706 $717–$720 Raised
Non-GAAP Operating Income ($USD Millions)FY26$5.5–$9.5 $24.5–$25.5 Raised
Non-GAAP Net Income ($USD Millions)FY26$17–$21 $45.5–$46.5 Raised
Non-GAAP Diluted EPSFY26$0.15–$0.18 $0.41–$0.42 Raised
Diluted Wtd Avg Shares (Millions)FY26~115.0 ~112.0 Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25, Q1 FY26)Current Period (Q2 FY26)Trend
AI/Product roadmapAgreement to acquire OfferFit; vision for agentic AI (Project Catalyst) OfferFit integration off to strong start; pricing ~$300k; attach rates expected to be high Accelerating
Demand/MacroStable macro; strong win rates; Shopify partnership “No meaningful change in macro; execution driving strength” Stable with better execution
DBNR/DownsellTTM DBNR down y/y but still strong; management watching downsell In-period DBNR stabilized and modestly improved vs Q1 Stabilizing
Regional trendsGlobal contributions; ANZ data center investment benefit implied Strong performance across regions; ANZ boosted by local data center Improving execution alignment
Messaging channelsIntroduced RCS/Banners in Q1 Premium messaging volumes up; flexible credits driving adoption (RCS/WhatsApp) Mix shifting to premium channels
Sales executionCRO hire (Q1) and pipeline normalization Higher win rates; better late-stage pipeline qualification Improving
Profitability/FCFNon-GAAP profitability streak in FY25/Q4 Third straight qtr of non-GAAP op income & FCF; one-time tax valuation allowance benefit from OfferFit Improving margins; one-time boosts

Management Commentary

  • CEO: “We delivered great second quarter results, generating $180 million of revenue, up 24% year-over-year and 11% from the prior quarter… $6 million of non-GAAP operating income, $17 million of non-GAAP net income, and $4 million of free cash flow.”
  • CEO on AI: “Our combined selling motion is off to a great start… OfferFit’s AI decisioning engine… expands and accelerates the Braze AI roadmap.”
  • CFO: “Non-GAAP gross margin of 69.3%… decrease y/y driven primarily by higher premium messaging volumes.”
  • CFO: “OfferFit increased deferred tax liability by ~$8M… generated a one-time $8M benefit to non-GAAP net income in Q2.”
  • CEO on channels: flexible credits model enabling broader premium channel testing (RCS/WhatsApp) across geographies.

Q&A Highlights

  • Demand and execution: Management emphasized historically high competitive win rates, better late-stage qualification, and no material macro change, framing the beat as execution-driven.
  • OfferFit attach and pricing: Early wins across all regions; full offering priced around ~$300k annually with a spectrum of tiers in development; contribution pace on track (~2 pts y/y growth).
  • DBNR dynamics: In-period DBNR stabilized and slightly improved vs Q1; TTM metric dropped only one point q/q.
  • CRPO/RPO: Organic trajectory encouraging; convergence with growth improving; duration/linearity noise acknowledged.
  • Messaging mix and premium channels: Premium volumes increased, particularly outside the U.S.; flexible credits catalyzing multi-country/channel experimentation.
  • First-party data strategy: With AI-driven demand aggregators, brands prioritizing first-party connections and loyalty—beneficial for Braze’s positioning.

Estimates Context

  • Q2 FY26: Revenue beat by ~$8.5M vs S&P consensus ($171.6M* vs $180.1M), and EPS beat by ~$$0.12 ($0.03* vs $0.15). Management cited lower revenue reserves (timely customer payments) and slight overage upside (~1 point of overachieve) plus downsell moderation and strong execution.
  • EBITDA missed vs S&P consensus (positive* expected vs GAAP-driven negative actual), reflecting stock-based compensation and acquisition-related amortization within GAAP. Non-GAAP operating metrics showed leverage.
  • FY26 consensus implies ~$718.4M revenue and ~$0.42 normalized EPS*, broadly aligned with raised guidance midpoint.*

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Beat-and-raise quarter: Strong top-line/EPS surprise and raised FY guide signal execution strength; expect estimate revisions higher near term.
  • Visibility improved: RPO/CRPO acceleration and DBNR stabilization reduce downside risk to growth trajectory through 2H.
  • AI monetization: OfferFit attach/pricing (~$300k/full offering) and roadmap cadence position Braze to capture incremental ACV among large enterprises.
  • Mix headwind to margins: Premium messaging volume growth pressures gross margin; operating leverage offsets via disciplined OpEx and cost-optimized locations.
  • Cash dynamics: Q2 FCF/net CFFO moderated due to acquisition-related payments and timing; management guides to quarterly variability.
  • Trading lens: Positive catalysts include AI narrative, CRPO strength, DBNR stabilization and higher FY guide; watch margins vs premium messaging and integration progress.
  • Medium-term thesis: Consolidation tailwinds and legacy marketing cloud displacement plus first-party data shifts support sustained ACV growth and multi-product cross-sell.

Non-GAAP adjustments: Braze’s non-GAAP metrics exclude stock-based comp, employer taxes on SBC, charitable contributions, contingent consideration adjustments, acquisition-related expense, and amortization of intangibles; reconciliations provided in the release.