Summary
Braze reported revenue of $227.2 million for the fiscal second quarter ended July 31, 2026, up 26.2% from $180.1 million in the prior-year quarter. For the six months ended July 31, 2026, revenue was $438.2 million, up 28.1% from $342.2 million a year earlier. Management tied the quarterly gain to new customers, upsells and renewals. The MD&A breaks the increase down further: about 55.3% came from existing customers and 44.7% from new customers. The company also said it will host its flagship customer engagement conference, Braze Forge 2026, in Las Vegas from September 28 to 30.
Gross profit rose 24.6% to $151.9 million, but gross margin slipped to 66.8% from 67.7%. Management said the decline came mostly from personnel costs tied to the acquired workforce and amortization of acquired technology, partly offset by efficiencies in the tech stack. The operating loss narrowed to $18.1 million from $38.8 million, and operating margin improved to negative 8.0% from negative 21.5%. Net loss attributable to Braze was $18.9 million, or $0.17 per diluted share, compared with $27.9 million, or $0.26 per diluted share, in the prior-year quarter.
Cash generation improved sharply. Operating cash flow was $24.2 million for the quarter, up from $7.0 million a year earlier, and free cash flow, a non-GAAP measure, was $21.7 million versus $3.5 million. Through the first six months, operating cash flow was $52.3 million and free cash flow was $48.5 million. Management said the improvement came from higher collections tied to new contracts and renewals. Deferred revenue was $346.7 million as of July 31, 2026, up 32.3% year over year. Remaining performance obligations were $1,092.5 million, up 26.7%, and $691.1 million of that is current.
Customer metrics kept moving in the right direction. Total customers reached 2,789 as of July 31, 2026, up from 2,422 a year earlier, and 361 customers had ARR of $500,000 or more, up from 282. Dollar-based net retention for all customers was 110% for the trailing 12 months, and 112% for the $500,000-plus cohort. Monthly active users were approximately 9.0 billion as of July 31, 2026, up from approximately 8.0 billion as of January 31, 2026.
Guidance points to a modest sequential step up. For the fiscal third quarter ending October 31, 2026, Braze guided revenue of $229.0 million to $230.0 million and non-GAAP operating income of $16.0 million to $17.0 million. For the full fiscal year ending January 31, 2027, the company guided revenue of $910.0 million to $913.0 million, non-GAAP operating income of $75.5 million to $76.5 million, and non-GAAP diluted net income per share of $0.64 to $0.65. Braze has not reconciled these non-GAAP targets to their closest GAAP measures.
The risk list is familiar but real. Braze has a history of operating losses, depends on third-party cloud infrastructure, and competes in crowded marketing technology markets. Management warns that inflation, interest rate moves and weaker consumer confidence can slow customer spending. Tax changes tied to the Pillar Two framework and the One Big Beautiful Bill Act could raise the future effective tax rate. Seasonality cuts both ways, since messaging volume and compute needs typically peak in the fourth quarter. On the product side, Braze signed a three-year strategic collaboration agreement with AWS, broadened its Databricks integration, and named Pearce Dolan chief product officer on August 24, 2026.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2027 | Q1 FY2027 | QoQ | Q2 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $227.2M | $211.0M | +7.7% | $180.1M | +26.2% |
| Gross profit | $151.9M | $138.7M | +9.5% | $121.9M | +24.6% |
| Gross margin | 66.8% | 65.7% | +1.1 pp | 67.7% | -0.8 pp |
| Research & development | $45.3M | $46.1M | -1.8% | $41.3M | +9.8% |
| Sales & marketing | $92.9M | $89.2M | +4.1% | $82.6M | +12.4% |
| General & administrative | $31.8M | $30.9M | +3.0% | $36.8M | -13.5% |
| Total operating expenses | $170.0M | $166.2M | +2.3% | $160.6M | +5.8% |
| Operating income (loss) | -$18.1M | -$27.5M | +34.1% | -$38.8M | +53.2% |
| Operating margin | -8.0% | -13.0% | +5.1 pp | -21.5% | +13.5 pp |
| Net income (loss) | -$18.3M | -$25.5M | +28.2% | -$27.8M | +34.1% |
| Net margin | -8.1% | -12.1% | +4.0 pp | -15.4% | +7.3 pp |
| Diluted EPS | -$0.17 | -$0.24 | +$0.07 | -$0.26 | +$0.09 |
| Customers | 2,789 | 2,713 | +2.8% | 2,422 | +15.2% |
| Net retention rate | 108.0% | 110.0% | -2.0 pp | 114.0% | -6.0 pp |
Risks
The company identified a material weakness in the operation of certain ITGCs relevant to key accounting, reporting and proprietary IT systems as part of the fiscal year ended January 31, 2026 assessment. Management cannot be certain when remediation will be complete or whether it will be successful, and failure could impair timely and accurate financial reporting or invite SEC sanctions.
Recent advances in generative and agentic AI are described as a significant disruptor in consumer engagement and marketing strategies, and competitors or third parties may incorporate AI tools into their offerings more quickly or more successfully. The company also depends on third-party AI models it does not control, whose outage, capacity constraint or unfavorable terms could disrupt the platform.
Inflation, higher interest rates, tariffs, trade restrictions and banking-sector instability have affected customer spending behavior and could reduce demand or push customers to renew at levels closer to current needs rather than larger commitments. The company also notes collection pressure could lengthen receivable collection and raise bad debt expense, negatively affecting free cash flow.
The company faces intense competition from established vendors including Adobe, Salesforce, Iterable and Klaviyo, plus in-house customer technologies. Larger competitors can bundle products, restrict platform access or lower prices, and continued technology-industry M&A could produce rivals with greater resources and pricing power.
Gross margin decreased 1.8 percentage points to 66.3% year to date ended July 31, 2026 from 68.1% in the prior-year period, and decreased 0.8 percentage points to 66.8% for the quarter, driven by personnel costs from the acquired workforce and amortization of acquired technology. Continued pressure could offset the 24.6% year-to-date gross profit growth.
Sales cycles with large enterprise customers generally run three to six months but can extend beyond 12 months, and macroeconomic pressure has previously extended sales cycles and reduced win rates. Delays widen the gap between operating expense incurred and subsequent revenue, and large enterprise churn would have a disproportionate effect on results.
Revenue grew 28.1% year to date ended July 31, 2026 to $438.2 million, but the company states it expects its annual revenue growth rate to decline in the future as the business matures, and warns that historical growth should not be relied on as an indication of future performance.
Some contracts limit price increases or include pricing guarantees, and mid-to-large enterprises may demand substantial discounts during negotiations. The company states it may be required or choose to reduce prices or change its pricing model, which would adversely affect revenue, gross margin and cash flow.
Approximately 45% of revenue for the six months ended July 31, 2026 was generated outside the United States, exposing results to currency fluctuations, differing labor regulations, more stringent European privacy rules, anti-corruption laws and geopolitical instability. Planned expansion into Europe and Asia-Pacific may pressure near-term operating results.
The company depends heavily on its chief executive officer and senior leadership, has recently experienced executive transitions, and has no employment agreements requiring executives to remain. Competition for experienced software engineers and senior sales executives is intense, and the hybrid and remote workforce model adds hiring, retention and compliance complexity.
The company relies on third-party cloud providers including Amazon Web Services and Rackspace, and on third-party messaging channels and mobile operating systems, to deliver its single platform. Any disruption, capacity limitation or degradation of interoperability could cause service credits, contract terminations or lost customers.
The automatic conversion of all Class B common stock into Class A common stock on January 30, 2026 eliminated the dual-class structure, distributing voting power among public stockholders and potentially increasing susceptibility to stockholder activism, proxy contests and unsolicited takeover proposals, which could be costly and disruptive.
SaaS KPIs
All quarters →Monthly Active Users
Total Customers
Current Remaining Performance Obligations
Remaining Performance Obligations
Customers with ARR of $500,000 or more
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Non-GAAP Free Cash Flow
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from Braze, Inc.'s SEC filings for Q2 FY2027 (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.