Q4 2025 Earnings Summary
- Strong New Customer Growth and Net New Logo Additions: Braze achieved its highest net new customer additions in 1.5 years, with total customer count increasing by 85 to 2,296 customers in Q4. This reflects strong new business momentum and robust demand for Braze's solutions.
- Planned Acquisition of OfferFit Enhances AI Capabilities and Growth Potential: The acquisition of OfferFit is expected to significantly enhance Braze's AI-driven optimization capabilities, enabling the company to differentiate versus competitors and grow deal sizes. This positions Braze as a leader in AI and customer engagement, capitalizing on market opportunities globally.
- Strengthening Competitive Position Against Legacy Marketing Clouds: Braze is capitalizing on legacy vendor replacement cycles and vendor consolidation trends, gaining market share as brands increasingly replace legacy marketing clouds with Braze's solutions. The company's competitive position against legacy competitors has never been stronger, as customers recognize Braze's focus and innovation in customer engagement.
- Braze has experienced higher than desired levels of churn, particularly among smaller accounts, and anticipates further contract rightsizing as customers renew, which could impact revenue growth and margins.
- Enterprise deal cycles are becoming longer and more complex, with increased scrutiny, more stakeholders involved, and a higher percentage of drawn-out RFPs, potentially slowing down new business acquisition and impacting growth.
- The planned acquisition of OfferFit is expected to be modestly dilutive to non-GAAP operating income margins for fiscal year 2026, deviating from Braze's previous margin expansion framework and potentially pressuring profitability in the near term.
| Metric | YoY Change | Reason |
|---|---|---|
Cash and Cash Equivalents | 35% increase (from $61,312k to $83,062k) | A strong recovery in liquidity is observed as cash jumped 35% from Q3 to Q4 2025. This improvement likely stems from enhanced operational performance and effective capital management strategies compared to the prior quarter’s net cash outflows, helping to bolster the cash reserve. |
Accounts Receivable | +5.4% (from $90,299k to $95,234k) | A moderate increase in receivables indicates that revenue accruals are growing. The modest rise reflects higher sales volume or adjustments in billing cycles relative to the previous quarter, building on trends seen in Q3 2025. |
Prepaid Expenses and Other Current Assets | ~16% increase (from $30,452k to $35,273k) | A notable acceleration in prepayments suggests that the company has ramped up spending on prepaid expenses (such as advertising, software subscriptions, etc.), likely as part of a strategic cost management or investment initiative compared to the lower levels in Q3 2025. |
Total Current Assets | Approximately 5% increase (from $613,321k to $644,026k) | The overall rise in current assets is driven by the significant increase in cash, along with moderate improvements in accounts receivable and prepaid assets. These gains more than offset any minor declines in other components, underlining a stronger liquidity position relative to Q3 2025. |
Deferred Revenue | +7.4% (from $223,682k to $239,976k) | An increase in deferred revenue implies that more customers are entering into annual upfront contracts or renewing existing ones. This growth in prepayments reflects a structural shift in contracting terms compared to the previous period, supporting future revenue recognition. |
Total Liabilities | +3.1% (from $384,199k to $396,249k) | A modest uptick in liabilities is primarily due to the growth in deferred revenue and operating lease liabilities. While some liability categories declined (e.g., accounts payable), the net effect points to conservative leverage management compared to Q3 2025. |
Stockholders’ Equity | +3.7% (from $458,053k to $474,861k) | The increase in equity is driven by positive contributions from stock-based compensation, proceeds from option exercises, and other comprehensive income. These gains outweighed the impact of any net losses, resulting in a stronger balance sheet than observed in Q3 2025. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue ($USD Millions) | Q1 FY 2026 | no prior guidance | $158 million to $159 million, ~17% YoY | no prior guidance |
Non-GAAP Operating Income ($USD Millions) | Q1 FY 2026 | no prior guidance | $0 to $1 million | no prior guidance |
Non-GAAP Net Income ($USD Millions) | Q1 FY 2026 | no prior guidance | $4.5 million to $5.5 million | no prior guidance |
Non-GAAP Net Income Per Share ($USD) | Q1 FY 2026 | no prior guidance | $0.04 to $0.05 | no prior guidance |
Total Revenue ($USD Millions) | FY 2026 | no prior guidance | $686 million to $691 million, ~16% YoY | no prior guidance |
Non-GAAP Operating Income ($USD Millions) | FY 2026 | no prior guidance | $25.5 million to $29.5 million, ~4% margin at midpoint | no prior guidance |
Non-GAAP Net Income ($USD Millions) | FY 2026 | no prior guidance | $34 million to $38 million | no prior guidance |
Non-GAAP Net Income Per Share ($USD) | FY 2026 | no prior guidance | $0.31 to $0.35 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q4 2025 | $155M – $156M | $160.4M | Beat |
Revenue | FY 2025 | $588M – $589M | $593.41M (sum of Q1–Q4 2025 revenue:) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Customer Acquisition and Growth | In Q1–Q3, Braze repeatedly highlighted strong customer count growth, enterprise wins, vendor consolidation trends, new business wins replacing legacy systems and enhanced retention metrics | Q4 saw robust revenue and customer growth, with diversified new wins across industries and geographies and an emphasis on improving retention through stabilization of at‐risk accounts | Consistent robust growth with increasing diversification and refined retention strategies. |
Churn and Net Retention Challenges | Across Q1–Q3, executives discussed persistent churn pressures, contract rightsizing, and pressures on dollar‐based net retention—with newer customer cohorts showing better expansion in parts but overall challenges remained | In Q4, while churn remains a challenge—with ongoing efforts to stabilize smaller, at‐risk accounts and slightly better performance among newer cohorts, DBNR metrics continued at 111% overall and 114% for large customers | Persistent challenges with gradual improvements in newer cohorts and cautious optimism. |
Enterprise Deal Cycle Complexity | Q1 and Q2 discussions focused on long evaluation cycles, increased stakeholder involvement, macroeconomic scrutiny, and complexity tied to customer size and incumbent advantages | Q4 executives emphasized even more the “stickier and longer term” nature of enterprise cycles, with formal RFP processes and customers’ reluctance for overlapping contracts, underscoring the high‐complexity environment | A consistently challenging area now articulated with greater detail in Q4. |
Macroeconomic Demand Environment | In Q1, Braze described a challenging environment with constrained budgets and cautious buyer behavior; Q2 reinforced macro pressures affecting metrics; Q3 described a stable yet unimproved demand outlook | Q4 reaffirmed a cautious yet stable demand environment, with diversification across industries mitigating challenges, though global economic uncertainties remain a factor | Steady caution throughout with diversification offsetting persistent macro pressures. |
Competitive Positioning Against Legacy Vendors | Q1–Q3 discussions emphasized strong wins replacing legacy marketing clouds, benefits from vendor consolidation, and the use of AI for differentiation over stagnant legacy players | Q4 executives stressed that legacy vendors are increasingly seen as stagnant and highlighted Braze’s focused R&D and strong enterprise replacement momentum | A consistently positive narrative that grows stronger over time. |
AI Innovation and Strategic Acquisitions (OfferFit) | In Q1–Q3, the focus was almost entirely on enhancing AI capabilities—such as AI copywriting, recommendation tools, and personalized engagement—with no mention of acquisitions | Q4 introduced a major strategic acquisition of OfferFit with its reinforcement learning technology, complementing ongoing AI innovation efforts and broadening personalized engagement use cases | A new element in Q4 that builds on a longstanding focus on AI innovation. |
Flexible Credit Model and Multi‑Channel Expansion | Q1 saw the initial rollout of flexible message credits to simplify global SMS and experimentation; Q2 further integrated credits for channels like RCS and WhatsApp; Q3 reported strong adoption in accelerating channel expansion | Q4 detailed planned expansion of the flexible credit model to additional channels (e.g., email content cards, banners) and reinforced multi‑channel flexibility across offerings in response to dynamic pricing and partnership shifts | A consistently expanding strategic pillar with increasing sophistication in channel integration. |
International Expansion and Geo‑Diversification | Q1–Q2 discussions showcased a growing international focus with revenue contributions from outside the U.S. (around 44–45%) and investments in data centers and regional teams | Q4 maintained a solid 45% non‑U.S. revenue with further diversification evident in diverse new international wins and an expanded data center footprint (including upcoming Indonesia support) | A steady and robust focus on global diversification and expansion. |
Margin and Profitability Pressures | Q1 highlighted improving gross margins and a reduction in operating losses, while Q2 delivered the first non‑GAAP operating income and Q3 acknowledged seasonality and premium channel headwinds | Q4 reported continued margin improvement with a positive non‑GAAP operating income and improved gross margin figures, although near‑term pressures from the planned OfferFit acquisition were noted | An overall upward trend in margins despite cyclical challenges and a cautious near‑term outlook. |
RCS Adoption Ahead of iOS 18 | Q2 and Q3 detailed enthusiastic preparations and pilots for RCS—highlighting its advantages in authentication, richer analytics, and seamless integration via the flexible credit model | Q4 did not mention RCS adoption ahead of iOS 18, indicating this topic is no longer at the forefront of the discussion [No citation] | No longer mentioned in Q4, suggesting integration into the broader messaging strategy or a temporary de‑focus. |
WhatsApp Pricing Uncertainty (No Longer Mentioned) | Q1 provided detailed discussion around dynamic pricing uncertainty for WhatsApp due to Meta’s evolving model, while Q2 had limited explicit mention and Q3 touched briefly on dynamic pricing within the flexible credit context | Q4 revisited the subject with explicit mention of the uncertainty around pricing, yet noted that its impact remains modest given WhatsApp’s low overall revenue share | While always present, the focus has shifted from detailed debate to a nuanced, integrated discussion. |
Strategic Partnerships and Go‑to‑Market Investments (No Longer Emphasized) | Q1 through Q3 consistently emphasized robust partnerships with agencies (Accenture, Deloitte, WPP) and significant investments in go‑to‑market initiatives—ranging from data platform integrations to global brand campaigns | Q4 continued to underscore active strategic partnerships (for example, with Shopify) and disciplined go‑to‑market investments, with no indication that these areas are de‑emphasized | A consistently integrated element of Braze’s approach, with no material reduction in emphasis over time. |
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OfferFit Acquisition Impact
Q: Will the OfferFit deal affect FY26 margins and growth?
A: Isabelle explained that the deviation from their growth margin framework for fiscal year 2026 is due to the OfferFit acquisition. The transaction is expected to add approximately 2 percentage points to year-over-year revenue growth and be modestly dilutive to non-GAAP operating income margins in the fiscal year. The organic outlook without OfferFit remains consistent with their framework. -
OfferFit Acquisition Rationale
Q: Why acquire OfferFit now instead of building in-house?
A: Bill stated that both teams have highly capable engineering and product groups. Braze saw an opportunity to combine strengths with OfferFit, a long-time partner. Together, they can move faster and deliver better outcomes for customers. -
Integration of OfferFit
Q: How will OfferFit integrate with Braze's platform?
A: Bill emphasized that Braze is committed to tight integration to maintain their advantage over fragmented marketing clouds. OfferFit's technology will be integrated into Braze's stack to enhance AI capabilities without adding complexity. -
Guidance Amid Macro Uncertainty
Q: Any adjustments to guidance due to macroeconomic conditions?
A: Isabelle noted they continue to maintain a "closer to the pin" guidance philosophy due to the evolving macro environment. Despite uncertainties, they haven't seen any pause in immediate trends or pipeline evolution. -
Expansion Trends in New Cohorts
Q: Are newer customer cohorts expanding better than older ones?
A: Isabelle confirmed that post-SERP cohorts are performing better than SERP cohorts, with the positive trend continuing beyond the previously noted 9 percentage point differential. -
Competitive Positioning
Q: How is Braze positioned against legacy competitors?
A: Bill stated they feel better about their competitive position than ever. Legacy marketing clouds are more stagnant, and partners are seeking new solutions. Braze continues to innovate and gain market share, particularly in enterprise replacements. -
Organizational Changes
Q: Any changes since the CRO announced stepping down?
A: Bill mentioned the search for a new CRO is going well, with field teams executing effectively during the transition. Global leaders currently report directly to him, and there are no major go-to-market changes. -
Project Catalyst and Guidance
Q: Is Project Catalyst contributing to guidance?
A: Isabelle stated that their guidance doesn't include OfferFit and that Project Catalyst isn't going GA as quickly as some might think. Bill added that the first private beta release will be at the end of Q1, with no specified GA date. -
Logo Churn and SMB Health
Q: How are logo churn and the SMB segment performing?
A: Isabelle explained they are starting to work through higher churn levels and saw less logo churn in Q4. They are rightsizing contracts with some customers but are pleased with the progress. -
Meta's Pricing Strategy Changes
Q: Any updates on Meta's pricing strategy impact?
A: Bill noted they continue to partner closely with Meta, but the landscape remains dynamic. Meta's decision to discontinue marketing messages in WhatsApp for U.S. customers impacts Braze very little commercially. The flexible credit model helps manage these changes. -
Vertical Focus and Shopify Integration
Q: How does the Shopify integration benefit customers?
A: Bill explained that enhanced e-commerce features and the upgraded Shopify integration simplify implementation and accelerate time to value. Data model expansions help customers deploy more quickly and enhance BrazeAI effectiveness. -
Flexible Credit Model Expansion
Q: Any updates on the flexible credit model?
A: Bill mentioned they are expanding the flexible credit model to include email, content cards, banners, audience, and message archiving. Adoption has been good, helping customers get up and running more quickly.