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Braze, Inc. (BRZE)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue was $160.4M, up 22.5% YoY and ~5% QoQ, with non-GAAP diluted EPS of $0.12; non-GAAP operating income was $7.9M (5.0% margin), marking the third straight quarter of non-GAAP net income profitability .
  • Results beat Wall Street: revenue beat ~$4.7M and EPS beat ~$0.07 versus S&P Global consensus; EBITDA missed (consensus positive, actual negative), reflecting continued GAAP operating loss and premium messaging cost mix; estimates context below *.
  • FY2026 guidance introduced: revenue $686–$691M, non-GAAP operating income $25.5–$29.5M, non-GAAP diluted EPS $0.31–$0.35; Q1 FY2026 revenue $158–$159M, with guidance explicitly excluding anticipated OfferFit acquisition, which is expected to add ~2ppt to revenue growth and be modestly dilutive to margins post-close .
  • Strategic catalysts: definitive agreement to acquire OfferFit ($325M cash/stock) to deepen agentic AI decisioning across Braze; enhanced Shopify partnership and e-commerce features; continued wins replacing legacy marketing clouds and point solutions .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line and profitability: revenue +22.5% YoY to $160.4M, non-GAAP operating margin 5.0%, non-GAAP diluted EPS $0.12, and free cash flow $15.2M in the quarter .
  • Enterprise momentum and diversification: total customers rose to 2,296 (+252 YoY), with $500K+ ARR customers up to 247 (+22% YoY), and notable new wins across regions/verticals; management highlighted legacy replacement and consolidation as tailwinds (quote: “We delivered strong fourth quarter results… high ROI… strong execution… third straight quarter of non-GAAP net income profitability”) .
  • AI strategy acceleration: Project Catalyst private beta timing and the OfferFit acquisition to integrate reinforcement-learning decisioning; CEO quote: “our complementary products and teams will come together to define the next chapter… Agentic AI…” .

What Went Wrong

  • Dollar-based net retention moderated: DBNR for all customers at 111% (down from 117% YoY) and 114% for large customers (down from 120% YoY), reflecting rightsizing and closer-to-need purchasing behavior .
  • Gross margin headwinds from premium messaging volumes (non-GAAP GM 69.9% vs 70.5% in Q3); CFO cited premium messaging mix as a partial offset to tech stack cost efficiencies .
  • WhatsApp/Meta channel volatility complicates forecasting; CEO noted dynamic pricing/feature landscape (e.g., discontinuation of certain WhatsApp marketing messages in U.S.), mitigated by Braze’s flexible credits model .

Financial Results

Core P&L and Cash Flow (Quarterly)

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$145.5 $152.1 $160.4
Non-GAAP Gross Margin (%)70.9% 70.5% 69.9%
GAAP Operating Margin (%)(19.2)% (21.4)% (13.4)%
Non-GAAP Operating Margin (%)2.9% (1.4)% 5.0%
Non-GAAP Diluted EPS ($)$0.09 $0.02 $0.12
Cash from Operations ($USD Millions)$11.6 $(11.4) $17.1
Free Cash Flow ($USD Millions)$7.2 $(14.2) $15.2

Segment Revenue Mix

Revenue ($USD Millions)Q2 2025Q3 2025Q4 2025
Subscription$140.0 $146.3 $153.9
Professional Services & Other$5.5 $5.8 $6.5

KPIs and Bookings

KPIQ2 2025Q3 2025Q4 2025
Dollar-Based Net Retention (All Customers)114% 113% 111%
Dollar-Based Net Retention ($500K+ ARR)117% 116% 114%
Total Customers2,163 2,211 2,296
Customers with ARR ≥ $500K222 234 247
RPO (Total, $USD Millions)$689.6 $716.8 $793.1
Current RPO ($USD Millions)$438.3 $458.2 $505.2

Results vs Estimates (Q4 2025)

MetricActualS&P Global Consensus
Revenue ($USD Millions)$160.4 $155.73*
Primary EPS (Diluted, $)$0.12 $0.054*
EBITDA ($USD Millions)$(19.49)*$4.95*

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

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 FY2026—$158.0–$159.0 New
Non-GAAP Operating Income ($USD Millions)Q1 FY2026—$0.0–$1.0 New
Non-GAAP Net Income ($USD Millions)Q1 FY2026—$4.5–$5.5 New
Non-GAAP Diluted EPS ($)Q1 FY2026—$0.04–$0.05 New
Diluted Shares (Millions)Q1 FY2026—~108.0 New
Revenue ($USD Millions)FY2026—$686.0–$691.0 New
Non-GAAP Operating Income ($USD Millions)FY2026—$25.5–$29.5 New
Non-GAAP Net Income ($USD Millions)FY2026—$34.0–$38.0 New
Non-GAAP Diluted EPS ($)FY2026—$0.31–$0.35 New
Diluted Shares (Millions)FY2026—~110.0 New

Notes:

  • Guidance excludes anticipated OfferFit acquisition; CFO expects ~2ppt revenue uplift and modest non-GAAP operating margin dilution once closed .
  • OfferFit expected to close in fiscal quarter ending July 31, 2025 .

Earnings Call Themes & Trends

TopicQ2 FY2025 (Q-2)Q3 FY2025 (Q-1)Q4 FY2025 (Current)Trend
Agentic AI & Project CatalystIntroduced Braze Data Platform; outlined Catalyst vision; free trial/PLG Named Gartner Leader; Canvas/AI enhancements; Catalyst timing; RCS/LINE Catalyst private beta timing; OfferFit acquisition to deepen RL decisioning Strengthening and accelerating
Legacy replacement & consolidationStrong wins vs marketing clouds; enterprise $500K+ ARR growth Ongoing replacements; record Black Friday volumes; global diversification Multiple enterprise takeaways; CRO transition stable; continued momentum Durable tailwind
Premium messaging mix & marginsNon-GAAP GM 70.9%; premium messaging uptake Non-GAAP GM 70.5%, headwind from premium messaging Non-GAAP GM 69.9%; CFO cites premium messaging offsets Slight margin pressure sequentially
DBNR & upsell dynamicsDBNR 114%/117% (all/large); rightsizing behaviors DBNR 113%/116%; cautious upsells DBNR 111%/114%; stabilization and improving post-ERP cohorts Gradual stabilization
Shopify/e-commerce featuresBraze Data Platform & partner ecosystem expansions Channel breadth; RCS/LINE; AI assistants Enhanced Shopify integration, templates, WhatsApp commerce capabilities Feature depth expanding
Regional/data sovereigntyInternational revenue rising (45%); RCS/LINE rollout EMEA/JP trends; LINE GA; RCS beta New data centers; upcoming Indonesia region Infrastructure expanding
Macro/tariffs/WhatsAppSMB challenges; flexible credits model launch Stable but cautious; bookings linearity explained Tariff uncertainty; Meta/WhatsApp changes; flexible credits mitigant Mixed macro; mitigations in place

Management Commentary

  • CEO: “We delivered strong fourth quarter results, generating $160.4 million of revenue… recognizing nearly $8 million of non-GAAP operating income… third straight quarter of non-GAAP net income profitability” .
  • CEO on OfferFit: “our complementary products and teams will come together to define the next chapter… Agentic AI automatically understands customers… strengthens customer relationships through heightened messaging relevance and intelligent optimization” .
  • CFO: “Non-GAAP gross profit… non-GAAP gross margin of 69.9%… driven by continued cost optimization of our technology stack… partially offset by higher premium messaging volumes” .
  • CFO on guidance: “Q1 FY2026 revenue $158–$159M… FY2026 revenue $686–$691M… OfferFit expected to add ~2ppt to revenue growth and be modestly dilutive to non-GAAP operating margin” .
  • CEO on competitive landscape: “Marketing Cloud… simply not the focus area… ecosystem starting to notice… Braze continues to push ahead into new frontiers” .

Q&A Highlights

  • OfferFit impact: Enhanced relevance via RL agents; value selling with demonstrable ROI; expected to grow deal sizes and differentiate; mix 42% equity/58% cash in $325M deal .
  • DBNR/guidance philosophy: “Closer to the pin” approach maintained; revenue growth inflecting ahead of DBNR; post-ERP cohorts outperforming .
  • Macro/tariffs: Enterprise cycles long and sticky; diversification across geos/verticals; continued momentum despite mixed environment .
  • Go-to-market: CRO search progressing; stable field execution; flexible credits model aids channel/pricing volatility .
  • Project Catalyst: Private beta end of Q1; no GA timing embedded in guidance .

Estimates Context

  • Q4 FY2025 actuals vs S&P Global consensus: revenue beat (~$160.4M vs $155.73M*), EPS beat ($0.12 vs $0.054*), EBITDA miss (actual $(19.49)M* vs $4.95M*), consistent with ongoing GAAP operating loss and premium messaging margin mix *.
  • Estimate breadth: EPS (# est.) 18*, revenue (# est.) 19*; expect sell-side to raise FY2026 EPS on operating leverage trajectory, and adjust EBITDA methodology given AI/services investment ramp and OfferFit dilution commentary *.

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

Key Takeaways for Investors

  • Revenue/EPS beat underscores durable demand and operating leverage; sequential margin expansion to 5.0% non-GAAP operating margin is a constructive inflection .
  • OfferFit accelerates agentic AI roadmap and should expand large-enterprise deal sizes; near-term GAAP/operating margin dilution expected, but medium-term differentiation improves competitive moat .
  • DBNR moderation remains the key watch item; management signals stabilization with improving performance of post-ERP cohorts and stronger new business momentum .
  • Premium messaging mix can pressure gross margin; flexible credits and channel breadth (RCS, LINE, WhatsApp commerce) mitigate volatility and support cross-channel upsells .
  • Guidance excludes OfferFit; model upside to revenue (~2ppt) and modest non-GAAP margin dilution post-close; monitor Q1 FY2026 execution vs fewer-day quarter .
  • Strategic catalysts: Shopify partnership, data sovereignty expansion, CRO search conclusion, and Project Catalyst beta milestones; these can influence pipeline velocity and partner ecosystem alignment .
  • Near-term trading: Positive skew from estimate beats and AI narrative; watch sell-side revisions and any commentary on WhatsApp pricing/feature changes affecting premium messaging margins .