Summary
Braze closed fiscal 2026 second quarter with revenue of $180.1 million, up 23.8% from the prior-year quarter. Year-to-date revenue reached $342.2 million, up 21.8%. Gross profit was $121.9 million, up 19.4% year over year. Gross margin slipped to 67.7%, down 2.5 percentage points, as acquisition-related personnel costs and amortization of acquired technology weighed on cost of revenue. The company also reported non-GAAP gross margin of 69.3%, compared with 70.9% in the prior-year quarter. Remaining performance obligations stood at $862.2 million, up 25.0%, while current deferred revenue was $262.1 million, up 23.6%. That deferred revenue growth points to steady billings, though the gross margin decline shows the cost of supporting larger premium messaging and infrastructure usage.
GAAP profitability moved in the wrong direction. Operating loss was $38.8 million, and the loss widened from the prior-year quarter. Net loss attributable to Braze, Inc. was $27.9 million, also a wider loss. Diluted net loss per share was -$0.26, and that per-share loss widened. Operating margin was -21.5%, down 2.3 percentage points. The gap between GAAP and non-GAAP results remained wide. Non-GAAP operating income was $6.0 million, and non-GAAP net income per diluted share was $0.15. Those non-GAAP figures exclude stock-based compensation and other items, so they tell a different story than the GAAP losses. Management pointed to stock-based compensation expense as a primary contributor to the GAAP operating loss.
Cash generation was uneven. Operating cash flow was $6.95 million in the quarter, down 40.1% from the prior-year quarter. For the first six months, operating cash flow was $31.10 million, essentially flat against the prior-year period. Capital expenditures were $2.61 million in the quarter, down 21.2%, and $2.83 million year to date, down 72.4%. Non-GAAP free cash flow was $3.5 million, compared with $7.2 million in the prior-year quarter. On a year-to-date basis, non-GAAP free cash flow was $26.4 million, compared with $18.7 million. The company said the year-to-date free cash flow improvement came from higher collections tied to new contracts and renewals.
Customer metrics gave mixed signals. Total customers rose to 2,422 from 2,163. Customers with ARR of $500,000 or more increased to 282 from 222. Monthly active users reached roughly 7.4 billion, up from roughly 7.2 billion as of January 31, 2025. But dollar-based net retention for all customers for the trailing 12 months ended July 31, 2025 was 108%, down from 114%. For customers with ARR of $500,000 or more, net retention was 111%, down from 117%. Management attributed the decline to customer turnover and renewals at lower subscription levels, noting that uncertain macroeconomic conditions and high interest rates have led customers to renew at levels closer to current needs rather than larger commitments.
Guidance points to slower sequential growth and continued non-GAAP profitability. For fiscal 2026 third quarter ending October 31, 2025, Braze expects revenue of $183.5 million to $184.5 million, non-GAAP operating income of $3.5 million to $4.5 million, non-GAAP net income of $6.5 million to $7.5 million, and non-GAAP net income per diluted share of $0.06 to $0.07. For the full fiscal year ending January 31, 2026, revenue guidance is $717.0 million to $720.0 million, with non-GAAP operating income of $24.5 million to $25.5 million, non-GAAP net income of $45.5 million to $46.5 million, and non-GAAP net income per diluted share of $0.41 to $0.42. The company did not reconcile these non-GAAP guidance measures to GAAP because of uncertainty around stock-based compensation and other items.
Risks remain familiar. Braze operates in competitive markets and has a history of operating losses. It relies on third-party cloud infrastructure. Macroeconomic weakness, inflationary pressure, high interest rates, and geopolitical uncertainty could hurt customer spending. The MD&A also flags tax legislation, including Pillar Two and the OBBBA, as potential headwinds to the effective tax rate and cash tax. The company faces seasonality in cost of revenue, with the highest sequential increase in messaging volume and compute requirements typically in the fourth quarter. Free cash flow could fluctuate with operating expenses and collection timing. For the quarter, the core tension is clear: revenue and RPO grew at a healthy clip, but GAAP losses widened and gross margin compressed, even as non-GAAP profitability and year-to-date free cash flow improved.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $180.1M | $162.1M | +11.1% | $145.5M | +23.8% |
| Gross profit | $121.9M | $111.2M | +9.6% | $102.1M | +19.4% |
| Gross margin | 67.7% | 68.6% | -1.0 pp | 70.2% | -2.5 pp |
| Research & development | $41.3M | $36.8M | +12.1% | $33.1M | +24.5% |
| Sales & marketing | $82.6M | $74.1M | +11.4% | $68.6M | +20.5% |
| General & administrative | $36.8M | $40.5M | -9.2% | $28.3M | +29.9% |
| Total operating expenses | $160.6M | $151.4M | +6.1% | $130.0M | +23.5% |
| Operating income (loss) | -$38.8M | -$40.2M | +3.7% | -$27.9M | -38.7% |
| Operating margin | -21.5% | -24.8% | +3.3 pp | -19.2% | -2.3 pp |
| Net income (loss) | -$27.8M | -$35.8M | +22.4% | -$23.1M | -19.9% |
| Net margin | -15.4% | -22.1% | +6.7 pp | -15.9% | +0.5 pp |
| Diluted EPS | -$0.26 | -$0.34 | +$0.08 | -$0.23 | -$0.03 |
| Customers | 2,422 | 2,342 | +3.4% | 2,163 | +12.0% |
| Net retention rate | 114.0% | 117.0% | -3.0 pp | 120.0% | -6.0 pp |
Risks
Macroeconomic uncertainty and high interest rates have led customers to renew at lower subscription levels. The trailing 12-month dollar-based net retention rate declined to 108% as of July 31, 2025 from 114% a year earlier, and to 111% from 117% for customers with ARR of $500,000 or more, primarily due to customer turnover and lower renewals.
Advances in generative and agentic artificial intelligence may disrupt consumer engagement and marketing strategies, and competitors may incorporate AI into their products more quickly or successfully. The company also faces evolving AI regulation, including the EU AI Act, which may require changes to policies and products.
Braze competes with Adobe, Salesforce, Airship, Iterable, Klaviyo, CleverTap, MoEngage and others that may lower prices or bundle products. The company may need to reduce prices or change its pricing model, and gross margin decreased to 67.7% in FY2026 Q2 from 70.2% in FY2025 Q2.
The company identified a material weakness in internal control over financial reporting tied to certain IT general controls for the fiscal year ended January 31, 2025. Remediation timing is uncertain, and failure to remediate or new weaknesses could impair timely and accurate financial reporting.
Braze is subject to stringent and changing privacy, data security and data protection laws and contractual obligations. A security breach or unauthorized access to customer data could harm reputation, reduce demand and create significant liabilities.
Large enterprise sales cycles generally run three to six months and can extend over 12 months. Macroeconomic pressure can lengthen these cycles and reduce win rates, delaying revenue while sales and marketing expenses are incurred upfront.
The platform relies on third-party cloud infrastructure providers including Amazon Web Services and Rackspace, as well as mobile operating systems and messaging channels such as Apple and Google. Disruptions or limitations at these providers could impair platform availability and customer engagement.
The company depends on its chief executive officer and senior management, and competition for experienced software engineers and senior sales executives is intense. Its hybrid and remote workforce adds complexity to hiring, training and retention.
The OfferFit acquisition creates integration challenges, diverts management attention and may dilute stockholders through issued shares. General and administrative expenses increased 40.3% for the six months ended July 31, 2025, partly due to acquisition-related professional services and legal costs.
International operations are expanding, with approximately 45% of revenue generated outside the United States for the six months ended July 31, 2025 and 2024. Risks include localization, European privacy rules, currency fluctuations and changing tax laws such as Pillar Two and the OBBBA.
Rapid growth and increasing complexity place significant demands on management and operational and financial resources. Failure to scale systems, processes and controls could lead to deployment delays, lower customer satisfaction, higher costs and reputational harm.
The dual class common stock structure concentrates voting control with Class B holders and certain executives, directors and significant stockholders. As of July 31, 2025, Class B holders had approximately 51.1% of voting power and executives, directors and 5% holders had approximately 60.8%, limiting Class A stockholders' influence.
SaaS KPIs
All quarters →Monthly Active Users
Total Customers
Current Remaining Performance Obligations
Remaining Performance Obligations
Free Cash Flow
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Customers with ARR $500,000 or more
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from Braze, Inc.'s SEC filings for Q2 FY2026 (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.