Summary of Braze (BRZE) Q2 2027 Earnings Call

1Key Financial Results and Metrics

Revenue: $227 million, up 26% year-over-year and 8% sequentially.

Non-GAAP Operating Margin: Improved by over 600 basis points year-over-year, reaching 9.7%.

Free Cash Flow: Record $22 million, compared to $4 million in the prior year.

Dollar-Based Net Retention: 110% overall; 112% for large customers (those spending at least $500,000 annually).

Customer Growth: Total customer count increased 15% year-over-year to 2,789; large customer cohort grew 28% year-over-year to 361.

Non-GAAP Net Income: $21 million or $0.19 per share, compared to $17 million or $0.15 per share in the prior year.

2Strategic Updates and Business Highlights

AI Adoption: Strong momentum in AI solutions, with approximately one-third of large customers adopting AI tools like Decisioning Studio and Agent Console.

AWS Partnership: A new three-year strategic collaboration agreement with AWS aims to enhance co-selling and expand market reach.

Product Development: Continued investment in AI capabilities, including the launch of Agentic Standards and enhancements to the Braze data platform.

Customer Engagement: Increased use of multichannel strategies and advanced features due to Operator, which has seen high engagement rates among users.

3Forward Guidance and Outlook

Q3 Revenue Guidance: Expected to be between $229 million and $230 million, representing approximately 20% year-over-year growth.

Full Year Revenue Guidance: Projected to be between $910 million and $913 million, indicating a year-over-year growth rate of about 23%.

Operating Income Guidance: For Q3, expected to be between $16 million and $17 million; full year guidance set at $75.5 million to $76.5 million.

4Bad News, Challenges, or Points of Concern

Gross Margin Pressure: Non-GAAP gross margin decreased slightly to 68.6% from 69.3% year-over-year, primarily due to increased messaging volumes and headcount in Decisioning Studio.

cRPO Deceleration: Current remaining performance obligations (cRPO) growth moderated, attributed to seasonality and the impact of the OfferFit acquisition.

Competitive Pressures: While competitive dynamics are favorable, there is ongoing concern about cost-consciousness among customers and the potential for DIY AI solutions.

5Notable Q&A Insights

AI Capabilities in RFPs: AI features are a central focus in customer RFPs, with Braze positioned strongly due to its comprehensive capabilities.

Customer Segmentation: Larger teams are adopting AI tools more rapidly, but there is a trend towards universal adoption across customer segments.

Professional Services Migration: Transition from subscription to professional services is ongoing, with expectations of 9-10% contribution from professional services moving forward.

Future Growth Potential: There is optimism regarding the ability to expand dollar-based net retention (DBNR) as customers increasingly adopt advanced features and multichannel strategies. Overall, Braze reported a strong quarter with significant revenue growth and positive developments in AI adoption, despite some challenges in gross margins and cRPO growth. The company remains focused on leveraging its AI capabilities and strategic partnerships to drive future growth.