On September 5, 2024, Braze Inc (BRZE, Financial) released its 8-K filing for the fiscal second quarter ended July 31, 2024. Braze Inc is a customer engagement platform that powers customer-centric interactions between consumers and brands. The company provides solutions for Retail & E-commerce, Media & Entertainment, Financial Services, and Travel & Hospitality related industries. The company offers a single, vertically integrated platform that encompasses the various functionalities, or layers, required for modern customer engagement: data ingestion, classification, orchestration, personalization, and action, all of which is supported by Sage AI by Braze, its AI engine designed to power AI functionality across all layers of this stack. It generates a majority of its revenue from the United States.
Performance Overview
Braze Inc (BRZE, Financial) reported revenue of $145.5 million for the second quarter of fiscal year 2025, surpassing the analyst estimate of $141.30 million. This represents a 26.4% increase from the $115.1 million reported in the same quarter of the previous fiscal year. The company's subscription revenue was $140.0 million, up from $109.7 million, while professional services and other revenue remained relatively flat at $5.5 million compared to $5.4 million.
The company achieved its first quarter of non-GAAP operating income profitability and non-GAAP net income profitability. Non-GAAP operating income was $4.2 million, a significant improvement from the loss of $7.6 million in the same quarter last year. Non-GAAP net income per share was $0.09, compared to a non-GAAP net loss per share of $0.04 in the prior year.
Key Financial Metrics
| Metric | Q2 FY2025 | Q2 FY2024 |
|---|---|---|
| Revenue | $145.5 million | $115.1 million |
| GAAP Gross Margin | 70.2% | 69.2% |
| Non-GAAP Gross Margin | 70.9% | 70.0% |
| GAAP Operating Loss | $28.0 million | $35.4 million |
| Non-GAAP Operating Income | $4.2 million | $(7.6) million |
| GAAP Net Loss per Share | $(0.23) | $(0.33) |
| Non-GAAP Net Income per Share | $0.09 | $(0.04) |
Operational Highlights
Braze Inc (BRZE, Financial) reported a total of 2,163 customers as of July 31, 2024, up from 1,958 customers a year earlier. The company also noted that 222 of its customers had annual recurring revenue (ARR) of $500,000 or more, compared to 173 customers in the previous year. The dollar-based net retention rate for all customers was 114%, down from 120% in the prior year, while the retention rate for customers with ARR of $500,000 or more was 117%, down from 123%.
Remaining performance obligations stood at $689.6 million, with $438.3 million expected to be recognized within one year. The company also reported net cash provided by operating activities of $11.6 million, compared to a net cash outflow of $17.5 million in the same quarter last year. Free cash flow was $7.2 million, a significant improvement from $(18.7) million in the prior year.
Commentary and Outlook
“We delivered a great second quarter, demonstrating strong top-line growth while driving efficiency in our business, achieving our first quarter of non-GAAP operating income profitability and non-GAAP net income profitability. Our results demonstrate our effective execution and continued demand for the Braze Customer Engagement Platform,” said Bill Magnuson, cofounder and CEO of Braze.
Looking ahead, Braze Inc (BRZE, Financial) has provided guidance for the fiscal third quarter ending October 31, 2024, with expected revenue between $147.5 million and $148.5 million. For the full fiscal year ending January 31, 2025, the company expects revenue between $582.5 million and $585.5 million.
Overall, Braze Inc (BRZE, Financial) has shown strong performance in the second quarter of fiscal year 2025, exceeding revenue estimates and achieving its first non-GAAP profitability. The company's ability to grow its customer base and improve its financial metrics highlights its effective execution and the continued demand for its customer engagement platform.
Explore the complete 8-K earnings release (here) from Braze Inc for further details.
