Summary
Braze closed the fiscal first quarter of 2024 with revenue of $101.8 million, up 31.3% from $77.5 million a year earlier. Gross profit rose 33.9% to $69.1 million, and gross margin came in at 67.9%, up from 66.6%. The operating picture stayed deeply negative. Operating loss was $41.9 million, wider than the $39.6 million loss in the prior-year quarter, though operating margin improved to -41.2% from -51.2%. Net loss attributable to Braze narrowed to $38.5 million from $39.3 million, and diluted loss per share improved to $0.40 from $0.42. Stock-based compensation was a large contributor to the GAAP operating loss. Non-GAAP operating loss improved to $16.0 million from $18.0 million.
Cash generation was the cleanest part of the quarter. Operating cash flow was $22.5 million, up 25.8% from $17.9 million in the prior-year quarter. Capital expenditures dropped to $40,000 from $1.96 million, a decline of 98.0%, so free cash flow, a non-GAAP measure, reached $21.7 million versus $15.7 million a year earlier. The MD&A ties the stronger free cash flow to higher collections from seasonally heavy fourth quarter billings and renewals. Braze said its current liquidity would cover working capital and capital expenditure needs for at least the next 12 months.
Customer metrics told a mixed story. Dollar-based net retention for all customers over the trailing 12 months ended April 30, 2023 was 122%, down from 127% for the trailing 12 months ended April 30, 2022. For customers with annual recurring revenue of $500,000 or more, retention was 124%, down from 133%. Total customers grew to 1,866 from 1,503, and the count of customers above the $500,000 ARR mark rose to 164 from 129. Monthly active users reached 5.1 billion as of April 30, 2023, up from 4.8 billion as of January 31, 2023. Remaining performance obligations were $477.5 million, up 22.2%, and current deferred revenue was $181.2 million, up 30.0%. Revenue outside the United States was about 43% of the total, up from 41%.
Management split the subscription revenue increase almost evenly, with about 49% coming from existing customers expanding committed entitlements and features and 51% from new customers. New wins and upsells in the quarter included Procore Technologies, Sonos, Sweetgreen and Swimply. Braze also announced an exclusive partnership with the consultancy Stitch and completed the North Star acquisition, which launched Braze Australia. The drop in net retention is the number to watch, since it suggests expansion within the installed base is getting harder and puts more weight on new logos.
Guidance points to steady growth and narrower losses. For the fiscal second quarter ending July 31, 2023, Braze guided revenue of $108.0 million to $109.0 million and a non-GAAP operating loss of $15.0 million to $16.0 million. Non-GAAP net loss per share is guided to $0.13 to $0.14 on 97.4 million weighted average shares. For the full fiscal year ending January 31, 2024, revenue is guided to $442.5 million to $446.5 million, non-GAAP operating loss to $54.0 million to $58.0 million, non-GAAP net loss to $50.0 million to $54.0 million, and non-GAAP net loss per share to $0.51 to $0.55 on 97.8 million shares. The company reiterated that its non-GAAP operating loss margin should be negative 7% or better in the fourth quarter of fiscal 2024. Braze did not reconcile the non-GAAP outlook to the closest GAAP measures, citing uncertainty around stock-based compensation.
The risk list in the filing is familiar but real. It includes unstable market and economic conditions, a history of operating losses, limited operating history at the current scale, the challenge of managing rapid growth, intense competition, reliance on third-party cloud infrastructure, and evolving cybersecurity and data privacy rules. The filing also names banking sector instability, inflation, interest rate increases and weaker consumer confidence as macro pressures that could slow customer spending.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $101.8M | $98.7M | +3.1% | $77.5M | +31.3% |
| Gross profit | $69.1M | $65.3M | +5.9% | $51.6M | +33.9% |
| Gross margin | 67.9% | 66.1% | +1.8 pp | 66.6% | +1.3 pp |
| Research & development | $29.7M | $26.8M | +11.2% | $21.6M | +37.6% |
| Sales & marketing | $57.3M | $52.8M | +8.5% | $46.0M | +24.4% |
| General & administrative | $24.0M | $22.2M | +7.9% | $23.6M | +1.7% |
| Total operating expenses | $111.0M | $101.8M | +9.1% | $91.2M | +21.6% |
| Operating income (loss) | -$41.9M | -$36.5M | -14.7% | -$39.6M | -5.7% |
| Operating margin | -41.2% | -37.0% | -4.1 pp | -51.2% | +10.0 pp |
| Net income (loss) | -$38.8M | -$33.8M | -14.8% | -$39.6M | +2.0% |
| Net margin | -38.1% | -34.3% | -3.9 pp | -51.1% | +13.0 pp |
| Diluted EPS | -$0.40 | -$0.36 | -$0.04 | -$0.42 | +$0.02 |
| Customers | 1,866 | 1,770 | +5.4% | 1,503 | +24.2% |
| Net retention rate | 122.0% | — | — | 127.0% | -5.0 pp |
Risks
Unfavorable macroeconomic conditions, including inflation, higher interest rates, banking sector instability and reduced customer confidence, may cause customers to delay or reduce spending on customer engagement technology and extend sales cycles. MD&A states these conditions have recently led to increased economic uncertainty.
Braze depends on renewals and expansion within existing customers. MD&A reports the trailing 12-month dollar-based net retention rate declined to 122% at April 30, 2023 from 127% a year earlier, and declined to 124% from 133% for customers with ARR of $500,000 or more.
Recent advances in and public availability of generative artificial intelligence may significantly disrupt consumer engagement and marketing strategies, requiring Braze to adapt its platform and creating new legal and ethical challenges.
Braze faces intense competition from legacy marketing clouds like Adobe and Salesforce and point solutions such as Airship, Iterable, MailChimp and MoEngage, which may bundle products, lower prices or restrict platform access and pressure Braze's sales, renewals and pricing.
Braze had an unremediated material weakness in internal control over financial reporting related to accounting for revenue recognition under ASC 606 as of April 30, 2023, which could affect the accuracy and timing of financial reporting.
Sales cycles with large enterprise customers can be long and unpredictable, generally three to six months but sometimes over 12 months, and macroeconomic pressure or remote work may lengthen cycles or reduce win rates, delaying revenue relative to sales expenses.
Changing privacy, data security and data protection laws, and potential SEC regulatory focus on customer engagement tools in financial services, could reduce demand or increase compliance costs. AI and machine learning offerings may add new legal and ethical obligations.
Braze depends on senior management, particularly its CEO, and faces intense competition for software engineers and senior sales executives. Its hybrid and remote work model, The Way Braze Works, adds complexity and may affect hiring, training and culture.
The platform depends on third-party providers, including AWS for cloud infrastructure and Apple and Google for mobile and web notifications. Any disruption, policy change or anti-tracking feature could degrade functionality and harm customer retention.
Braze expects its annual revenue growth rate to decline in the future as the business matures, and its rapid historical growth may not be indicative of future growth, making forecasting difficult if assumptions prove incorrect.
The dual class structure concentrates voting control with Class B holders, who as of April 30, 2023 held approximately 84.2% of voting power, limiting Class A stockholders' ability to influence important transactions and potentially affecting the stock price or index inclusion.
SaaS KPIs
All quarters →Monthly Active Users
Total Customers
Current Remaining Performance Obligations
Remaining Performance Obligations
Free Cash Flow
Customers with ARR of $500,000 or more
Non-GAAP Gross Margin
Non-GAAP Operating Loss
Summary, forecast, risks and KPIs are extracted from Braze, Inc.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.