Summary
Braze closed fiscal third quarter with revenue of $64.0 million, up 62.6% from the prior-year quarter. The company attributed the increase to new customers, upsells and renewals. GAAP gross margin was 70.0%, up 6.7 percentage points from the prior-year quarter, and GAAP gross profit was $44.8 million, up 79.9%. The margin gain came from economies of scale, as infrastructure costs grew slower than revenue, plus work to optimize the tech stack and customer support efficiency. GAAP operating loss was $10.4 million, wider than the prior-year quarter. Net loss attributable to Braze was $8.7 million, a narrower loss than the prior-year quarter, and diluted EPS was negative $0.42, an improvement from the prior-year quarter. Operating margin was negative 16.3%, an improvement of 6.0 percentage points from the prior-year quarter.
For the nine months ended October 31, 2021, revenue was $167.6 million, up 56.3%. GAAP gross profit was $113.9 million, up 67.4%. GAAP operating loss was $35.6 million, wider than the prior-year period. Net loss attributable to Braze was $33.8 million, wider than the prior-year period, and diluted EPS was negative $1.67, worse than the prior-year period. Operating cash flow was negative $10.9 million for the nine months, down from the prior-year period. Capital expenditures were $1.1 million for the nine months, down from the prior-year period. Non-GAAP free cash flow was negative $13.8 million for the nine months, compared with negative $9.8 million in the prior-year period. Current deferred revenue was $98.4 million at October 31, 2021, and remaining performance obligations were $304.0 million.
Operational metrics show expansion and customer growth. Total customers reached 1,247, up from 841 a year earlier. Dollar-based net retention for all customers was 126% for the trailing 12 months, compared with 124% in the prior-year period. Customers with annual recurring revenue of $500,000 or more totaled 97, up from 67, and that cohort had dollar-based net retention of 136%, compared with 134%. Monthly active users were 3.5 billion as of October 31, 2021, up from 3.0 billion as of January 31, 2021. International revenue increased by $10.4 million in the quarter and by $24.9 million in the first nine months. The filing states 47.5% of the quarterly revenue increase came from existing customers and 52.5% from new customers; for the nine months, those figures were 57.2% and 42.8%. The company grew headcount by more than 300 employees year to date, bringing the team to over 1,000, and completed its initial public offering with net proceeds of $457.1 million.
Guidance is issued for the fiscal fourth quarter and the full fiscal year ending January 31, 2022. Braze expects a non-GAAP operating loss of $15.5 million to $16.5 million for the fourth quarter and $33.5 million to $34.5 million for the full fiscal year. Non-GAAP net loss is guided to a loss of $15.0 million to $16.0 million for the fourth quarter and a loss of $31.5 million to $32.5 million for the full fiscal year. Non-GAAP net loss per share is guided to a loss per share of $0.19 to $0.20 for the fourth quarter and $0.90 to $0.93 for the full fiscal year. The company did not reconcile the non-GAAP guidance to GAAP because of uncertainty around stock-based compensation tied to its stock price.
The risk list is long and familiar for a recently public software company. Braze cites its history of operating losses, limited operating history, and the chance that recent rapid growth will not be repeated. It also flags the ability to manage growth, attract new customers and renew existing ones, intense competition, cybersecurity and data privacy risks, evolving industry standards and regulations, reliance on third-party cloud infrastructure, and general market, political, economic and business conditions. COVID-19 remains a wildcard, with possible sales cycle delays and customer requests for discounts or modified terms. Seasonality also matters: the company expects the highest sequential increase in messaging volume and compute needs in the fourth quarter because of holiday activity. Management expects cost of revenue and operating expenses to rise in absolute dollars as the business scales.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $64.0M | — | — | — | — |
| Gross profit | $44.8M | — | — | — | — |
| Gross margin | 70.0% | — | — | — | — |
| Research & development | $12.7M | — | — | — | — |
| Sales & marketing | $29.6M | — | — | — | — |
| General & administrative | $12.9M | — | — | — | — |
| Total operating expenses | $55.2M | — | — | — | — |
| Operating income (loss) | -$10.4M | — | — | — | — |
| Operating margin | -16.3% | — | — | — | — |
| Net income (loss) | -$9.1M | — | — | — | — |
| Net margin | -14.2% | — | — | — | — |
| Diluted EPS | -$0.42 | — | — | — | — |
| Customers | 1,247 | — | — | — | — |
Risks
Braze identified three material weaknesses in internal control over financial reporting covering the financial statement close process, revenue recognition under ASC 606, and information technology controls. If remediation is not timely, the accuracy and timing of financial reporting may be adversely affected.
Operating loss widened to $35.6 million for the nine months ended October 31, 2021 from $21.6 million in the prior-year period, and operating cash flow used $10.9 million year to date, down 78.2% versus the prior-year period. Continued investment in sales, marketing, research and development, and public company costs may keep losses elevated.
Braze depends on third parties for email and SMS delivery and on Apple and Google services for mobile and web notifications, and hosts substantially all infrastructure with AWS under an agreement AWS can terminate with 30 days' notice. Disruption or policy changes at these providers could cause customer dissatisfaction, liability, or lost customers.
The customer engagement market is intensely competitive, with established competitors such as Adobe and Salesforce and point solutions including Airship, Iterable, MailChimp and MoEngage. Larger competitors may bundle products or restrict platform access, potentially forcing price reductions and reducing revenue and gross margins.
Sales cycles with large enterprise customers are long and unpredictable, generally three to six months and sometimes over 12 months. COVID-19 work-from-home arrangements may lengthen sales cycles or reduce win rates, delaying revenue recognition while sales and marketing expenses are incurred.
Certain customers negatively impacted by COVID-19 have decreased or delayed spending, requested pricing discounts, requested modified payment terms, or sought to reduce commitments when renewing. These requests may continue and could decrease revenue and cash receipts.
Revenue grew 62.6% in the quarter ended October 31, 2021 and 56.3% for the nine months ended October 31, 2021, but Braze warns that rapid revenue growth may not be indicative of future growth and expects its annual revenue growth rate to decline as the business matures.
The dual class structure gives Class B common stock ten votes per share; as of December 15, 2021, Class B holders controlled approximately 98.8% of voting power, and executive officers, directors, and 5% holders controlled approximately 72.5%. This limits Class A stockholders' ability to influence important transactions.
Lock-up agreements restrict many shares until May 15, 2022, with early releases beginning January 5, 2022, for approximately 2.8 million shares and vested options. Future sales or the perception of sales could depress the market price of Class A common stock.
International revenue increased by $24.9 million for the nine months ended October 31, 2021, and Braze expects further expansion, including via its Japan joint venture. International operations carry risks from Brexit, differing labor and privacy laws, currency fluctuations, and longer collection cycles.
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
Summary, forecast, risks and KPIs are extracted from Braze, Inc.'s SEC filings for Q3 FY2022 (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.